Description of the event
Jingsheng Electromechanical issued an announcement on the “Double Improvement of Quality and Return” action plan. Specific measures include: 1) focusing on the “advanced materials, advanced equipment” strategy to improve the quality of development; 2) strengthening R&D technology innovation to lead high-quality development through continuous innovation; 3) consolidating governance and improving the level of standardized operation; 4) continuously improving the quality of information disclosure and strengthening communication with investors; 5) establishing a strong concept of return to investors to effectively return investors.
Incident comments
Focus on the “advanced materials, advanced equipment” strategy. In terms of materials, 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 next-generation diamond wire. In May 2023, the company released a new tungsten diamond wire product. The company's 6-inch and 8-inch silicon carbide substrates have also entered the mass production stage, and the core misalignment can stably achieve TSD <100 pcs/cm? , BPD <400 pcs/cm? , reaching the leading level in the industry. 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.
Strengthen R&D technology innovation, continue vertical technical iteration of equipment, and expand the layout horizontally. In 2023, the company launched a fifth-generation monocrystalline furnace based on N-type products, introducing semiconductor superconducting magnetic field technology into the photovoltaic field, opening a process window for low-oxygen N-type crystal growth, and improving battery efficiency from the material side. Develop various battery process equipment such as tubular PECVD, LPCVD, diffusion, annealing, single-chamber multi-boat ALD, and dry boat cleaning. An 8-inch single-chip silicon carbide epitaxial growth device with international advanced standards was successfully developed. On the basis of 6-inch epitaxial equipment, control problems such as temperature field uniformity and flow field uniformity in chamber design were solved, and a mature and stable 8-inch silicon carbide epitaxial process was achieved.
In terms of advanced equipment, the company currently has plenty of orders for equipment, which will support continued 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 $3.03 billion (tax included) had not been completed for semiconductor equipment. The company's overall on-hand order amount continued to grow year over month. In the field of photovoltaics, the company launched a fifth-generation monocrystalline furnace to lay out 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). In terms of semiconductor equipment, the company's silicon wafer equipment layout is perfect, and continues to make breakthroughs in SiC epitaxial furnaces, PECVD, LPCVD, diffusion, annealing, etc., and on-hand orders remain high. It is expected that as the boom recovers and the company passes more verification, new orders for semiconductor equipment are expected to continue to grow.
Use share repurchases, increase cash dividends, and optimize the dividend rhythm. Since 2022, the company has implemented two share repurchases, using a total of 199 million yuan of its own capital, repurchased a total of 3.926 million shares, and repurchased shares to implement equity incentives or employee stock ownership plans. Since the company went public, the dividend ratio has been high, the dividend payment rate has remained above 20%, and the dividend amount has continued to increase. In 2022, the company's dividend amount reached 589 million yuan.
The company focuses on the “advanced materials, advanced equipment” strategy and continues to strengthen R&D technology innovation. Net profit due to mother is expected to be 46.8/55.3/6.30 billion yuan in 2023-2025, corresponding to 9/7/6 times PE. In the future, the company will consolidate corporate governance and increase repurchases and dividends. Currently, there are plenty of orders in hand, which can support subsequent performance and maintain a “buy” rating.
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. The risk of on-hand order fulfillment.