Event description

The company disclosed three quarterly reports: the revenue in the first three quarters was 5.9 billion yuan, with a year-on-year growth of 378%; the attributable net profit was 4.2 billion yuan, with a year-on-year growth of 638%; among them, the net profit attributable to the parent company in the third quarter of 23Q3 was 1.78 billion yuan, with a year-on-year growth of 531%.

Event comment

The performance exceeded expectations again, and the situation of quartz sand volume and price rising continued to extend. The domestic photovoltaic quartz sand price ushered in an accelerated rise in 23Q2, reflecting that the performance was relatively sufficient in 23Q2~23Q3. The company's 23Q3 revenue was 2.47 billion yuan, with a year-on-year growth of 359.5% and a month-on-month growth of 11.5%; the attributable net profit was 1.78 billion yuan, with a year-on-year growth of 531%. The month-on-month increase was 10.3%. 23Q3 single quarter gross profit rate 90.15%, a year-on-year increase of more than 20 pct, mainly due to the sharp rise in the price of quartz sand products, while the cost end increase is limited, premium capacity continues to be realized.

The new capacity release provides scale and profitability flexibility in 2024. The company's new quartz sand production capacity of 60,000 tons is expected to be put into production in 23Q4 and gradually enter the climbing state. We believe that the actual production and product structure need to be determined in combination with the market demand and the company's production strategy; however, we judge that the company's sales volume in 2024 is expected to increase greatly, even if the current price level is maintained, it can also bring higher marginal elasticity to the company.

Photovoltaic quartz sand high barrier unchanged. We emphasize that the logic of high barrier of photovoltaic quartz sand remains unchanged. 2023 is the highlight time of the company, and this highlight time has good toughness and can be extended to 2024~2025 (more price elasticity in 2023, more expansion elasticity on the basis of high price in the next 2 years). Although there are many new entrants in the market in the past two years who want to lay out, it is basically difficult to overcome the technical and product quality problems from the current progress. Therefore, the enterprises that can really mass produce at present are still several enterprises in stock, and the market is still in the oligopoly pricing stage.

The semiconductor field is a new growth curve for the company, and it is worth looking forward to in the medium term. The application of quartz material in semiconductor industry is mainly diffusion and etching process in wafer production. The quartz parts applied in etching process mainly include quartz ring, quartz protective cover, etc. The quartz parts applied in diffusion process mainly include quartz boat, quartz furnace tube, quartz baffle, sleeve, etc. At present, the company's market share in semiconductor quartz materials is relatively low, and it is still in its infancy. With the further expansion of the company's market share in quartz materials for the semiconductor industry, quartz materials for the semiconductor industry will become an important growth point for the company in the future, and the share will increase greatly.

It is estimated that the performance in 2023-2024 will be 6.2 billion yuan and 9.4 billion yuan, corresponding to PE of 5.4 times and 3.6 times, with a buy rating.

Risk hint

1. Other enterprises in the same industry expand production through technological innovation

2. The progress of the company's production capacity is slow.