The company's net profit from 1-3Q23 increased by nearly 127% year on year. 1-3Q23 achieved revenue of 240 million yuan (YoY +81.92%), net profit of 43 million yuan (YoY +127%), net profit of 0.27 million yuan (YoY +146%) after deducting non-return net profit of 27 million yuan (YoY +146%), and gross profit margin of 35.24% (YOY-1.89pct). 3Q23 achieved revenue of 125 million yuan in a single quarter (YoY +87.9%, QoQ +65.0%), net profit of 28 million yuan (YoY +72.7%, QoQ +123.9%), net profit after deducting non-return net profit of 19 million yuan (YoY +36.07%, QoQ +133.1%), and gross profit margin of 35.13% (YOY-4.76pct, QoQ+1.50pct). As product sales and revenue increased, the company optimized cost control, reflected economies of scale, and maintained rapid profit growth.
The silicon carbide long crystal furnace covered leading customers in the industry and signed 120 million yuan contracts with major customers. The company's silicon carbide single crystal furnaces are mainly used in the preparation of 6-8 inch silicon carbide single crystal substrates. Customers include major manufacturers in the industry such as San'an Optoelectronics, Tony Electronics, Tianyue Advanced, and BYD. On this basis, the company and customer J signed a “Silicon Carbide Furnace Equipment Sales Contract” of about 120 million yuan, which was executed in three batches. Based on our estimates of the pace at which leading domestic substrate suppliers are expanding production, the compound growth rate of domestic conductive silicon carbide substrate production in 23-25 is about 200%. It is expected that the company's silicon carbide monocrystalline furnace equipment is expected to grow rapidly in line with industry penetration.
Semiconductor-grade monocrystalline silicon furnaces have cooperated with leading customers in the industry for a long time, and processes above 28nm have been mass-produced. Since entering the semiconductor monocrystalline silicon furnace field requires silicon wafer/substrate manufacturers to verify and pass chip manufacturer audits, only monocrystalline silicon furnaces can enter the silicon chip supply chain after device performance verification. The verification barriers are high and the localization rate is low. The company has been deeply involved in the industry for many years and has been in the lead in the country: customers have covered the Shanghai silicon industry (Shanghai Xinsheng), Liangwei (Jin Ruihong), Shengong Co., Ltd. and Hejing Technology; covering mainstream 12-inch, 8-inch lightweight, and heavy-mixed silicon wafers, mass production of 28nm and above has been achieved.
About 339 million yuan of photovoltaic equipment contracts were signed with customers, and the expansion of product categories opened up diversified growth space.
Based on the company's technology accumulation in semiconductor-grade monocrystalline silicon furnaces, photovoltaic applications are expanding smoothly. Recently, the company signed a “Gaojing Equipment Procurement Contract” with Sichuan Gaojing Solar Technology. The total contract price including tax is about 339 million yuan, including monocrystalline furnace control systems, photovoltaic-grade single crystal furnaces, and ancillary products. In addition, the company's 1H23 other long crystal equipment and ancillary products have accounted for about 15% of revenue. In the future, as the business of photovoltaic products and other materials and equipment expands, the company's growth path will gradually be diversified.
Investment suggestions: We are optimistic about the core technology of semiconductor-grade monocrystalline silicon furnaces and the rapid growth of silicon carbide single crystal furnaces. It is estimated that in 23-25, the company is expected to achieve net profit of 0.72/1.21/157 billion yuan (YoY +109%/67%/30%), corresponding to PE in 22-24, 87/52/40 times, respectively, giving it an “increase in holdings” rating.
Risk warning: demand for silicon carbide single crystal furnaces falls short of expectations, semiconductor-grade single crystal furnace output falls short of expectations, etc.