The company's 1H23 net profit increased by nearly 447% compared with the same period last year. 1H23 realized revenue of 114 million yuan (YoY+75.79%), net profit of 15 million yuan (YoY+447.2%), net profit of 8 million yuan (YoY+397.6%) and gross profit margin of 35.3% (YoY+1.1pct). 2Q23 achieved revenue of 76 million yuan (YoY+57.44%,QoQ+97.9%) in a single quarter, net profit of 13 million yuan (YoY+221.7%,QoQ+418.5%), net profit of 8 million yuan (YoY+497.6%), an increase of 8 million over the previous quarter, and gross profit margin of 33.63% (YoY+1.29pct,QoQ-5.12pct).

Silicon carbide crystal furnace covers the leading customers of the industry, and will develop rapidly with the penetration of the industry in the future. The company's silicon carbide single crystal furnace is mainly used in the preparation of 6-8 inch silicon carbide single crystal substrate, customers include San'an Optoelectronics, Tony Electronics, Tianyue Advanced, BYD and other major manufacturers. As the silicon carbide crystal furnace needs to meet the customer's requirements of temperature control accuracy, pressure control accuracy, limit vacuum, pressure rise rate and other index parameters under a specific process route to ensure crystal consistency and stability, the company can introduce differentiated application solutions according to different customers. According to our calculation on the production expansion rhythm of domestic head substrate suppliers, the compound growth rate of domestic conductive silicon carbide substrate expansion in 23-25 years is about 200%. In the context of the rapid expansion of the industry, the company's silicon carbide single crystal furnace equipment is expected to grow rapidly with the penetration of the industry.

Semiconductor-grade monocrystalline silicon furnace is leading in China, and the batch production has been realized by the process above 28nm. As entering the field of semiconductor monocrystalline silicon furnace requires wafer / substrate manufacturer verification and chip manufacturer audit, monocrystalline silicon furnace can enter the wafer supply chain only after device performance verification, which takes a long time and high barriers. At present, the localization rate of 12-inch semiconductor silicon wafer is low and the domestic monocrystalline furnace equipment accounts for a low proportion in this field, the company has been in the domestic leading position in the deep ploughing industry for many years: customers have covered Shanghai silicon industry (Shanghai Xinyi), Lion Micro (Jin Ruihong), Sheng Gong shares, synthetic technology; covering the mainstream 12-inch, 8-inch light-doped and heavily doped silicon wafer preparation, the above 28nm process has achieved batch production. In the future, with the expansion of 12-inch semiconductor silicon wafer production and the improvement of the localization rate of superimposed monocrystalline silicon furnace, the company's business is expected to accelerate production.

Signed with customers 120 million yuan silicon carbide single crystal furnace contract, performance growth into the continuous driving force. The company's 24-25 revenue target for equity incentive is 5.99yuan and 821 million yuan. On this basis, the company signed a "contract for the sale and sale of silicon carbide furnace equipment" with customer J, the contract price, including tax, is about 120 million yuan, which is executed in three batches. The first batch of advance payment will be delivered 3-4 months after payment, and the performance period of the second and third batches of the contract shall be subject to the orders signed by both parties. In the context of the rapid expansion of production in the industry, the signing of this contract will inject continuous impetus into the company's performance growth.

Investment suggestion: we are optimistic about the core technology of semiconductor-grade single crystal silicon furnaces and the rapid growth of silicon carbide single crystal furnaces. It is estimated that the company is expected to achieve a net profit of 0.66 YoY+92%/62%/50% in 23-25, corresponding to the 22-24 PS is twice that of 95-58-39, respectively.

Risk hint: the demand of silicon carbide single crystal furnace is lower than expected, the discharge of semiconductor single crystal furnace is not as expected, and so on.