Key points of investment
Event: On November 4, 2023, the company held a signing and launch ceremony for the “250,000 6-inch, 50,000 8-inch silicon carbide substrates project”, which aims to accelerate research on key core technologies on the semiconductor material side and achieve localized replacement.
The silicon carbide substrate production expansion project was officially launched, and production capacity climbed rapidly: On November 4, 2023, Jingsheng Electromechanical held the signing and launch ceremony of the “250,000 6-inch, 50,000 8-inch SiC Substrates Project”. The construction period of the project was 2 years, and the total project investment was 2.12 billion yuan, of which 1,988 billion yuan was invested in fixed assets. The company began research and development of silicon carbide crystal growth equipment and processes in 2017, and has successively successfully developed 6-inch and 8-inch silicon carbide crystals and substrates. It is one of the few domestic companies that can supply 8-inch substrates. At present, a pilot line for the growth, slicing and polishing of 6-8 inch silicon carbide crystals has been built. The 6-inch substrate has been verified by many downstream companies and is in the rapid volume increase stage. Currently, the monthly production capacity is about 5,000 pieces, the monthly production capacity is expected to reach 10,000 pieces by the end of 2023, and the monthly production capacity is expected to reach 20,000 pieces by the end of 2024; the 8-inch substrate is in the small-batch trial production stage.
Jingsheng has achieved self-made equipment and mastered the core process. SiC substrates have superior performance: (1) Self-made equipment:
Jingsheng Electromechanical is the leader of photovoltaic single crystal furnaces and semiconductor long crystal furnaces. Relying on long crystal technology, core processing equipment such as long crystal, cutting and polishing of silicon carbide substrates has also been self-made; (2) Mastering the long crystal process: the most difficult part of long crystals on silicon carbide substrates is the control of temperature, gas, and pressure. Process control determines the level of yield. The advantages of Jingsheng electromechanical photovoltaic single crystal furnaces are self-made software algorithms that are continuously applied to silicon carbide long crystals.
New energy vehicles+photovoltaic power generation drives SiC emissions, and Jingsheng grasps the opportunities for localization: the field of new energy vehicles and photovoltaic power generation is the main application scenario for SiC devices. In particular, new energy vehicles are the largest application market in the future. According to YOLE, the market size of conductive SiC power devices for new energy vehicles is expected to reach 5 billion US dollars in 2027, accounting for 79% of SiC downstream application scenarios. Many SiC models have been mass-produced and delivered worldwide. SiC has ushered in a period of introduction to vehicles.
Jingsheng electromechanical equipment+materials platform-based layout: (1) Photovoltaic equipment: ① Single crystal furnace: The launch of the fifth generation of low-oxygen single crystal furnaces to help improve battery efficiency. ② Batteries and component equipment: The target is to sign new orders of 3 billion yuan in 2023, and PECVD equipment has been introduced to the market. (2) Silicon carbide epitaxial equipment: Single-chip & double-chip 6-inch epitaxial equipment is sold in batches, and 8-inch single-chip equipment is launched. (3) Material: ① Quartz Crucible: Ningxia Xinjing had revenue of 1.36 billion yuan in the first half of 2023, net profit of 680 million yuan, and net interest rate of about 50%. ② Diamond wire: The first phase of the mass production project was put into operation and mass sales were achieved, the second phase of the production expansion project was promoted, and the development of tungsten wire diamond wire was accelerated. ③ Silicon carbide substrates: Start a production expansion project for 250,000 6-inch and 50,000 8-inch substrates.
Profit forecast and investment rating: PV equipment is the first curve of Jingsheng Mechatronics growth, the second curve is the volume of photovoltaic consumables and semiconductor consumables, and the third curve is the complete volume of semiconductor equipment and silicon carbide equipment. We maintained the company's net profit of 47/58/70 billion yuan in 2023-2025, corresponding to PE 13/11/9 times, and maintained a “buy” rating.
Risk warning: Downstream production expansion falls short of expectations, and new product expansion falls short of expectations.