Pan-semiconductor Changjing equipment leader, equipment+material-driven company with steady growth. The company started with semiconductor long crystal technology. In '22, the global photovoltaic monocrystalline furnace market accounted for about 70%. At the same time, the company was leading in long crystal technology such as semiconductors, silicon carbide, and sapphires. In addition, the company rapidly released pan-semiconductor equipment such as photovoltaic cell module equipment and silicon carbide epitaxial equipment. Relying on the technical barriers of long crystal, the company invests in silicon carbide substrates, sapphires, cultivation diamonds, etc. in the field of materials, and is entering into supporting consumables for silicon-based materials such as diamond wire and quartz crucibles. It is estimated that the company's net profit for 23-25 is 51.7/62.1/7.18 billion yuan, which is 10/9/7 times PE for 23-25, respectively. Comparable companies had a 24-year PE average of 12 times. The company was given 12 times PE in 23 years, corresponding to the target price of 56.88 yuan, maintaining the “buy” rating.
The fifth-generation PV MCZ monocrystalline furnace consolidates the company's leading position in Changjing, and semiconductor equipment is expected to continue to grow due to the fact that N-type TopCon batteries are prone to concentric circles when the oxygen content in silicon wafers is high, affecting battery yield or conversion efficiency. The fifth-generation single crystal furnace launched by the company can be equipped with a superconducting magnetic field (MCZ) to reduce the oxygen content to below 7 ppma, eliminate concentric circles, improve battery conversion efficiency and crystallization rate.
We expect the average annual market for photovoltaic monocrystalline furnaces to remain at a high level of more than 18 billion yuan in 24-25.
As the penetration rate of TopCon batteries increases, the company's MCZ monocrystalline furnace is expected to further consolidate its leading position in photovoltaic single crystal furnaces. The company has achieved full equipment coverage such as long crystals, slicing, grinding machines, chamfering, and polishing in the field of silicon-based semiconductors, and is expected to lead the domestic replacement of semiconductor single crystal furnaces.
The silicon material business such as quartz crucibles and diamond wire expanded rapidly, and materials in various fields achieved breakthroughs. With the high market share of single crystal furnaces, the company expanded consumables business such as quartz crucibles and diamond wire. Affected by the shortage of quartz sand and high demand, the price of photovoltaic quartz crucibles has increased by about 900% since September '21, and the high price is expected to remain high in 2024. According to our estimates, the average annual market for quartz crucibles in China is expected to exceed 40 billion yuan in 24-25, and a CAGR of 29.3% in 23-25. The company's market share in '22 was about 19.6%, and it is expected that in the future, it will rely on “Super Crucible” to further consolidate its leading position in Crucible. The thinning of diamond wire has become a trend, and tungsten diamond wire is expected to become mainstream. We expect the domestic market size of the 25-year gold bullion line to be 12.39 billion yuan, with a CAGR of 14.8% in 23-25. The company makes its own tungsten wire busbars and is actively expanding production, which is expected to overtake cars at curves.
The company's silicon carbide substrates have entered the countdown to large-scale mass production. Silicon carbide epitaxial equipment market share is leading. According to Yole, the global SiC device market is expected to reach US$6.30 billion in 2027, with a CAGR of 34% in 21-27, of which silicon carbide substrates account for 47% of device costs. The company relies on pan-semiconductor long crystal technology, and indicators such as yield and performance of 6-inch substrates are in the leading echelon of the industry. It has now formed a production capacity of 5,000 pieces/month. Core equipment such as long crystal furnaces are all homemade, and 8-inch substrates have been expanded. The company expects to achieve annual production capacity of 250,000 6-inch and 50,000 8-inch substrates in 25 years. Silicon carbide epitaxial wafers have high requirements for external extension equipment. The company's 6-inch two-piece silicon carbide epitaxial equipment has achieved mass sales, ranking among the highest in the country, and the 8-inch monolithic silicon carbide epitaxial equipment is being verified by customers. Substrates and epitaxial equipment are expected to play a synergistic role in epitaxial plants to help the company strengthen its silicon carbide layout.
Risk warning: The company's new product development falls short of expectations, the company's new business development is not smooth, and industry competition is intensifying.