Description of the event

The company's semi-annual revenue was 1.45 billion yuan, an increase of 150% over the previous year, and net attributable profit was 408 million yuan, an increase of 343% over the previous year.

Incident comments

The quartz crucible business is the core support for performance. 2023H1's revenue was 1.45 billion yuan, an increase of 150% over the previous year; of these, revenue from its main business, quartz crucible, was 940 million yuan, or 242%, accounting for 64.3% of the company's overall revenue; revenue from photovoltaic supporting processing services was 600 million yuan, 74.6% year on year, accounting for 31.9% of the company's overall revenue. Looking at a single quarter, 23Q2 had revenue of 8.2 million yuan, an increase of 162% over the previous year, and performance of 236 million yuan, an increase of 389% over the previous year.

The acceleration of the downstream boom supports the Crucible to maintain a high level of prosperity. 2023H1, the output of all major links in China's photovoltaic industry chain has achieved rapid growth. According to the PV industry regulations, corporate information, and industry association estimates, the country's production of polysilicon, silicon wafers, batteries, and modules reached a new high, with a year-on-year increase of over 65%. Total exports of photovoltaic products reached US$28.92 billion, up 11.6% year on year. Among them, in the silicon wafer sector, the national output from January to June exceeded 253.4 GW, an increase of 65.8% over the previous year. The high increase in silicon wafer production has directly driven demand for auxiliary materials in the industrial chain, such as crucibles, to usher in a high boom.

Quartz crucible: The company has certain competitiveness on the procurement and production side. The company has established strategic cooperative relationships with important high purity quartz sand suppliers at home and abroad, and the procurement channels for high purity quartz sand are relatively stable. The company has mature production technology and is at a high level in the industry in terms of product manufacturing technology, equipment and mold configuration. At present, the quartz crucibles produced by the company have high purity, strong crystallinity resistance and good heat resistance. Currently, the quartz crucible developed by the company can be used for more than 400 hours, and the limit test has exceeded 500 hours. The special nature of the monocrystalline silicon industry chain objectively requires each supplier to maintain stability at the product and service quality level. Unstable product or service quality can easily cause situations such as crystal pulling failure and crystal rod scrapping, etc., which will cause great losses to downstream customers. Therefore, in terms of supplier selection, downstream customers prefer high-quality suppliers with long-term cooperation, and the company will continue to benefit from quality advantages.

Silicon material cleaning: The company continues to reduce process costs. The company mainly processes and cleans silicon materials such as native polycrystals, complex polycrystals, single crystal edge skin, single crystal head and end, pot substrate, and single crystal samples, etc., and uses different processes in a targeted manner according to different types of silicon materials.

Through independent R&D and cooperative research and development with equipment suppliers, the company has broken through key technical points such as silicon material sorting and silicon material crushing, and is committed to fully automated and efficient production processes and reduced production costs.

Cutting fluid treatment: The technical advantages are obvious. The company completed the business transformation from waste mortar treatment to diamond wire cutting fluid treatment, and at the same time realized online processing and recycling of cutting fluid with increasingly fine diamond wire diameters and thinner silicon wafers. Based on the frequency of technological changes in the monocrystalline silicon industry chain, the company's technological advantages will guarantee the market share of the company's products and services.

The estimated performance for 2023-2024 is 99-1.54 billion, corresponding to 9.9 or 6.4 times PE, and purchase ratings.

Risk warning

1. The progress of production capacity construction is slow; 2. The supply of quartz sand is tight.