Looking ahead, we expect the price of high-quality large-size quartz crucibles to remain high in 2024, carbon-carbon field profits hit bottom or a small rebound, while metallurgical brake sales will benefit from a recovery in travel demand. The company's performance is on an upward trend, maintaining a "buy" rating.
The company expects results to grow by 85.65% to 101.80% year-on-year in the first three quarters of 2023. The company issued a forecast for the third quarter of 2023, and estimated that the operating income for the first three quarters was 178.8 billion yuan, an increase of 159.00% and 174.24% over the same period last year, of which the operating income for the third quarter alone was 7288.28 million yuan, an increase of 287.75% and 327.27% over the same period last year. It is estimated that the net profit of returning to the mother in the first three quarters is 2.3 billion yuan, an increase of 85.65% to 101.80% over the same period last year, of which the net profit in the third quarter is 0.99 billion yuan, an increase of 190.38% and 228.85% over the same period last year.
The price of quartz crucible remained high in the third quarter, and the contribution of new projects to production increased in the fourth quarter. In terms of production and sales of quartz crucibles, we estimate that there is little month-on-month fluctuation in production and sales of quartz crucibles in the third quarter. with the gradual commissioning of 20 production lines of Sichuan Jiangyou in the fourth quarter of this year, the production and sales of quartz crucibles will support the further growth of quartz crucibles. In terms of price, since June, the price of quartz crucible has been stable at a high level, of which the tax price of 36-inch crucible has reached more than 40,000 yuan. Looking forward to the future, as the production expansion progress of overseas high-purity sand is not as expected, and the supply of domestic small and medium-sized enterprises is still dominated by Chinese and foreign layered sand, we expect that high-quality and large-size quartz crucibles will maintain a tight supply and demand pattern, and prices are expected to remain stable at high levels in the future.
Carbon thermal field business profits or a small rebound. Over the past year, as leading companies continue to expand production, the price of carbon thermal field products continues to fall to more than 200,000 yuan / ton level, the non-net interest rate deducted by leading companies has dropped to 10%, second-and third-tier enterprises are basically in a state of not making money, industry profits basically hit bottom, and the overall progress of production expansion has also slowed down. In the third quarter of 2023, with the rebound of downstream operating rate and the commissioning of N-type silicon wafers, the price and profitability of carbon thermal field products rebounded slightly from the previous quarter.
Risk factors: the risk of bad debts of the company's accounts receivable; the risk of deteriorating competition in the industry; the risk of sharp fluctuations in raw material prices; the risk that photovoltaic demand is less than expected; the company's new capacity progress is not as expected.
Earnings forecasts, valuations and ratings: we expect metallurgical brakes in the company's traditional business to benefit from the recovery in travel demand, while new businesses such as carbon-carbon thermal field, quartz crucible and carbon ceramic disc will support continued growth in future performance.
Combined with the company's development plan and the changes of industry supply and demand, we maintain the company's EPS forecast of 0.80max 1.79 / 2.71 yuan in 2023 to 2025, combined with the company's normal historical PE trend of about 30x and comparable companies (Oujing Technology, Jinbo shares, etc.) are valued at about 10x, and considering the performance growth brought by the company's photovoltaic business and carbon ceramic brake plate, we think that the company's reasonable PE valuation in 2024 is 15x, corresponding to the target price of 26 yuan in 2024. Maintain the company's "buy" rating.