Description of the event
The company's 2023Q1-Q3 revenue was 13.46 billion yuan, +80.39% year-on-year, and net profit to mother was 3.51 billion yuan, +74.94% year-on-year. Among them, 2023Q3 revenue was 5.06 billion yuan, +63.47% year over year, and net profit to mother was 1.31 billion yuan, +63.14% year over year.
Incident comments
Performance remained high, and the materials sector drove an increase in profit margins. Thanks to the continuous acceptance of equipment orders and the volume of material business, the company's revenue and net profit to mother maintained a high increase. 2023Q3 maintained a high gross profit margin of 40.94%, with a net profit margin of 31.72%, an increase of 4.01pct year-on-year at a high level. The company's materials business is scarce and more profitable than the equipment business. As the share of revenue from the materials business expands, it will drive the company's overall profitability to further increase.
There are plenty of orders for equipment in hand, which will support continued high growth in performance. By the end of 2023Q3, the company had not completed contracts for crystal growth equipment and intelligent processing equipment totaling RMB 28.75 billion, of which RMB 3.03 billion had not been completed for semiconductor equipment. (Tax included, same below). The company's overall on-hand order amount continued to grow year over month. The iteration of PV Changjing equipment technology is compounded by market demand to expand production, and demand is strong. Although the market is concerned about the decline in silicon wafer production expansion, the company launched the 5th generation monocrystalline furnace, introduced superconducting magnetic field technology, and opened a process window for low-oxygen N-crystal growth, which is expected to improve battery efficiency from the material side. Downstream silicon wafer factories will continue to invest in advanced production capacity, and silicon wafer equipment is expected to continue to bring new demand through technological iteration. At the same time, the company is also actively diversifying and expanding the layout of photovoltaic cell tubular equipment and module end equipment. The order target for battery equipment and module equipment in 2023 will exceed 3 billion yuan (tax included). Currently, battery equipment research and development is progressing smoothly, and many orders for module equipment have been received. Under the diversified layout, the company's overall orders for the equipment sector are expected to remain high. In terms of semiconductor equipment, on-hand orders remained flat month-on-month as of the end of 2023Q3. Orders for silicon wafers have slowed down, mainly due to the decline in semiconductor sentiment, but order breakthroughs have continued to be achieved in fields such as SiC epitaxial furnaces, and in-hand semiconductor orders remain high. It is expected that next year, as the boom recovers and the company passes more downstream verification, new orders for the company's semiconductor equipment are expected to resume growth.
The company has formed a healthy industrial layout for the collaborative development of equipment+materials. The material sector layout is comprehensive, and it is expected that it will continue to expand. The company has established a product system focusing on high-purity quartz crucibles, diamond wire, sapphire, SiC substrates, semiconductor valves, pipe fittings, magnetic fluids, and precision components, and has developed products such as synthetic sand quartz crucibles and a new generation of diamond wire. The 2023H1 materials business revenue was 1,883 billion yuan, accounting for 22.4% of revenue. The share of material business revenue continued to increase in 2023. The company is also further expanding its business layout in the field of materials and precision components. In May 2023, the company released a new tungsten wire product; the company also develops core components such as semiconductor valves, magnetic fluids, special fans, and exhaust treatment devices to independently resolve supply chain shortcomings in some equipment components. The materials business has strong profitability. The company's materials business is scarce and advanced, and its profitability is outstanding. We believe that the company has a high level of confidence in achieving the 5 billion yuan materials business target set at the beginning of the year.
Meanwhile, the current price of quartz crucibles remains high, diamond wire production capacity continues to rise, SiC has reached mass production, and the materials business is expected to grow further in 2024.
The company's net profit for 2023-2025 is estimated to be 4.97 billion yuan, 63.4, and 7.10 billion yuan, respectively. The corresponding PE is 11, 9, and 8 times, respectively. It maintains a “buy” rating and continues to be recommended.
Risk warning
1. The risk that downstream production expansion falls short of expectations;
2. The risk that the company's new product development progress falls short of expectations;
3. In-hand order fulfillment risk.