The company's contribution to the price increase in the second quarter of 2023 is quite obvious. As the second phase of the 60,000-ton project is about to be put into operation, it will support the continuous growth of the company's photovoltaic business. With overseas production expansion far below expectations, the supply and demand for inner layer sand in the crucible is expected to maintain a tight pattern. At the same time, the company's semiconductor business continues to expand, its product structure continues to be optimized, and its share continues to increase. The company's performance trend is improving, and the static PE valuation has been digested to around 5~6x, maintaining the “buy” rating.
Revenue for the first half of 2023 increased 392.71% year on year, with net profit for the single second quarter increasing 700.36% year on year. The company announced its results for the first half of 2023, with operating income of 3,434 billion yuan, an increase of 392.71% over the previous year; net profit of 2,431 billion yuan, an increase of 742.52% over the previous year. The reported performance was at the upper limit of the performance forecast range. Looking at the second quarter alone, the company's revenue was 2,211 billion yuan, an increase of 405.90% over the previous year; the net profit of the parent company reached 1,610 billion yuan, an increase of 700.36% over the previous year.
Revenue from the photovoltaic business rose sharply by 732% year on year, and supply and demand for mid-layer sand maintained a tight pattern. The company's photovoltaic high-purity sand business achieved revenue of about 2.98 billion yuan in the first half of the year, an increase of 732.00% over the previous year. We estimate that this is mainly due to a significant rise in the price of middle and inner layer sand. In the context of continuous growth in downstream demand and limited growth in imported sand, the demand gap for inner layer sand in the crucible continues to widen, and price elasticity has also increased; in terms of production and marketing, apart from brief environmental maintenance, the company's production capacity is basically at full capacity in the second quarter. Furthermore, we expect the company's second-phase high-purity sand project to be further put into operation after September this year, which will support the company's high-purity sand production and sales volume. growth. Looking forward to the future, the steady downstream operating rate of silicon materials has ushered in a recovery. N-type production and release in the third quarter will drive a further increase in demand for high-quality quartz sand, while the supply of domestic small and medium-sized enterprises is still dominated by middle and outer layers of sand. Combined with overseas expansion progress, it is far below expectations. We expect middle and inner layer sand to maintain a tight supply and demand pattern in the future.
Semiconductor business revenue increased 90.82% year over year, and downstream customer share continued to rise. The company's semiconductor business revenue reached about 213 million yuan in the first half of the year, an increase of 90.82% over the previous year. It still achieved rapid growth despite low semiconductor demand in the first half of the year. This shows that the company's product quality and production stability continue to be recognized by customers, and the market share of downstream clients continues to increase. We expect it to maintain a rapid level of growth in the future.
At the same time, the sales share of the company's high-end semiconductor products continues to increase, the product structure is optimized, and profit levels are also expected to continue to rise.
Risk factors: Demand for photovoltaics and semiconductors falls short of expectations; the company's new production capacity and commissioning progress falls short of expectations; competition on the supply side of the industry intensifies; overseas production expansion exceeds expectations.
Profit forecast, valuation and rating: Considering that high-purity sand maintains tight supply and demand and the semiconductor business continues to grow, we raised the company's EPS forecast from 2023 to 2025 to 15.45/28.36/35.97 yuan (the original forecast was 13.78/26.85/34.06 yuan). Considering that Oujing Technology, which is in the lower reaches of the industrial chain, has a PE valuation of around 10x in 2023 (based on Wind's unanimous expectations), we gave the company 10x PE in 2023, a target price of 155 yuan, and maintained the “buy” rating.