Key points of investment
2023 performance forecast: Performance growth of 50-70%; expected to accelerate the expansion of the silicon carbide substrate business in 2024
1) 2023 performance: The company achieved net profit of 43.9 to 4.97 billion yuan, an increase of 50% to 70% over the previous year; net profit after deduction of 41.2 to 4.71 billion yuan, an increase of 50.4% to 71.7% over the previous year. Continued benefits from the photovoltaic “equipment+materials” business area drive performance growth.
2) 2023 Q4 performance: The company achieved net profit of 88,000-1.46 billion yuan, -33% to +11% month-on-month and -4% to +59% year-on-year; net profit without return to mother of 8.2 billion yuan to 1.41 billion yuan, -33% to +15% month-on-month, and -1% to +69% year-on-year.
3) Expect the silicon carbide substrate business to accelerate release in 2024. The company's “project to produce 250,000 6-inch and 50,000 8-inch silicon carbide substrates per year” has started. 8-inch silicon carbide substrates have been mass-produced, and 8-inch substrates with two thicknesses of 500um and 350um are available. The core misalignment of 6-inch and 8-inch mass-produced chips can stably achieve TSD <100 pcs/cm2 and BPD <400 units/cm2, leading the industry.
Pan-semiconductor “equipment+materials” leader, platform-type layout space continues to open
1) Photovoltaic equipment: The company is a leader in photovoltaic monocrystalline furnaces, expanding into the fields of photovoltaic superconducting magnetic field monocrystalline furnaces, battery+module equipment, quartz crucibles (leading the leader), and diamond wire, opening up a second growth curve for the photovoltaic business.
2) Semiconductor equipment: Large silicon wafer equipment - The company has achieved full coverage and sales in 8-12 inch crystal growth, slicing, grinding, thinning, polishing, CVD, etc., and has developed equipment such as 12-inch epitaxial, LPCVD, and ALD based on advanced processes. Power semiconductor equipment - The company sells single-chip and double-chip 6-inch silicon carbide epitaxial equipment in batches, and successfully develops 8-inch monolithic silicon carbide epitaxial growth equipment with international advanced standards, greatly reducing downstream production costs.
3) Silicon carbide: Technical side: The company has achieved mass production of 8-inch silicon carbide substrates. Client: The company has formed a procurement intention with customer A (company announcement), and will prioritize supplying them with a total of at least 230,000 silicon carbide substrates from 2022 to 2025. Production capacity side: In Shangyu, Zhejiang, the company has started a project of 250,000 6-inch+50,000 8-inch silicon carbide substrates. Device side: The company released a 6-inch double-chip silicon carbide epitaxial device. The 8-inch device was successfully developed and led the industry to accelerate into the 8-inch era.
4) Sapphire: The company has grown the world's leading 700kg sapphire crystal, gradually increasing the large-scale mass production grade from 300kg to 450kg. Promote the increase in production capacity of the subsidiary Ningxia Xinjingsheng and strengthen its scale advantage.
Investment advice: Optimistic about the company's future performance in the fields of photovoltaics, semiconductors, silicon carbide, and sapphire. The company's net profit for 2023-2025 is estimated to be 47.5/58.3/70 billion yuan, an increase of 62%/23%/20% over the previous year, corresponding to PE of 11/9/7. Maintain a “buy” rating.
Risk warning: The progress of semiconductor equipment research and development has fallen short of expectations; the expansion of downstream photovoltaic production falls short of expectations.