Description of the event
The company disclosed its 2023 annual report: operating income of about 7.184 billion yuan, up 258.46% year on year; net profit attributable to shareholders of listed companies was about 5,039 billion yuan, up 378.92% year on year; basic earnings per share were 13.95 yuan, up 374.49% year on year. At the same time, the company plans to distribute a cash dividend of 57 yuan (tax included) to all shareholders for every 10 shares, use the capital reserve fund to increase the share capital, and 5 shares for every 10 shares.
Incident comments
The downstream boom accelerated in 2023, providing strong support for total demand for quartz sand. In 2023, according to industry regulations, enterprise information and industry association estimates, the country's production of polysilicon, silicon wafers, batteries and modules reached 1.43 million tons, 622 GW, 545 GW, and 499 GW, respectively, an increase of more than 60% over the previous year. As a key consumable, demand for quartz was also greatly increased.
At the company level, the photovoltaic sector is still the core growth force. By sector: 1. Revenue from the photovoltaic sector was 6.3 billion yuan, up 388.7% year on year, and the main revenue of the photovoltaic industry accounted for 88.49% of the company's main business revenue; gross profit margin was 91.37%, up 13.87 pcts year on year; 2. Optical fiber semiconductor revenue was 498 million yuan, up 34.56% year on year, accounting for 6.97% of the company's main business revenue; gross profit margin was 67.12%, up 12.25 pcts year on year; 3. Traditional light source products were 324 million yuan, down 0.96% year on year, accounting for the company's main business revenue 4.54%; gross profit margin was 44.22%, down 3.56 pcts year over year.
Looking at quartz sand, the main product of photovoltaics, the sales volume in 2023 was 34,273 tons, including 30,054 tons for export and 4,219 tons for personal use.
Strong profits are sustainable in the medium term. In the long run, the status of quartz sand as the most barrier photovoltaic auxiliary material remains unchanged. The best proof is that the demand for downstream silicon wafers has been weak and consolidated since 23H2, and the price of quartz sand is still strong. Currently, mainstream crucible manufacturers are choosing to target overseas high-purity quartz sand, which also means that they continue to be optimistic about the mid-term market. Currently, a new production capacity of 60,000 tons has been completed by Focus Quartz Co., Ltd., and is now about to enter volume, thereby releasing scale flexibility. In the short term, the increase in downstream utilization is expected to provide marginal recovery support for upstream auxiliary materials demand, and keep a close eye on microscopic changes in 24Q2 and the second half of the year. In the medium term, the battery will switch from P type to N type, which is expected to provide stronger α for the demand for quartz sand.
The semiconductor sector is on the second growth curve, and it is worth looking forward to in the medium term. The application of quartz materials in the semiconductor industry is mainly diffusion and etching processes in wafer production. The quartz components used in the etching process mainly include quartz rings, quartz shields, etc., and the quartz components used in the diffusion process mainly include quartz boats, quartz furnace tubes, quartz baffles, tubes, etc. Currently, the company's market share in semiconductor quartz materials is relatively low, and it is still in the initial development stage. With the company's market development in the semiconductor field and the gradual layout of new products, the market share of quartz materials in the semiconductor field will expand further in the future.
The expected 2024-2025 performance is 63.73 billion, corresponding PE is 4.8 or 4 times, and the purchase rating.
Risk warning
1. Other enterprises in the same industry expand production through technological innovation;
2. The company's production capacity is progressing slowly.