Key points of investment
Looking forward to an upward profit bottom in the industry; moving towards a leader in the integration of equipment+consumables+service
1) 2023 performance: The company achieved revenue of 6.18 billion yuan, a year-on-year increase of 73%; net profit to mother was 1.46 billion yuan, an increase of 85% over the previous year. Profitability: The company's comprehensive gross profit margin was 42.5%, an increase of 1 pct over the previous year. The core benefit was the accelerated commissioning of the highly profitable diamond wire production capacity. The net interest rate was 23.6%, an increase of 1.5 pct over the previous year, benefiting from the advantage of scale and the increase in gross margin.
2) Revenue by business: cutting equipment reached 2.88 billion yuan, up 95.2% year on year, gross profit margin of 32.2% year on year, -1 pct year on year; cutting services reached 1.72 billion yuan, up 85% year on year, gross profit margin of 43% year on year, -2.4 pct year on year, due to fluctuations in silicon wafer prices; cutting consumables reached 1.16 billion yuan, up 38.4% year on year, gross profit margin 58.6% year on year, and +15.4 pct year on year, benefiting from the company's rising production capacity, bringing advantages in scale and leading edge in line diameter. The innovative business reached 250 million yuan, a year-on-year increase of 60.7%.
3) Progress of each business
(1) Photovoltaic cutting equipment: As of December 31, 2023, the total amount of orders for the company's photovoltaic cutting equipment was 2.26 billion yuan, an increase of 53.3% over the previous year, and continued to rank first in market share;
(2) Photovoltaic Diamond Cable: Production in 2023 is about 56 million kilometers, an increase of 65.6% year on year; annual sales volume (excluding personal use) is about 38 million kilometers, an increase of 51.1% year on year. Bulk sales of 36 μm, 34 μm and 32 μm linear models have been achieved, batch testing of 30 μm linear types, and development tests of finer linear types have been carried out. Tungsten diamond wire accelerates R&D and testing, leading the industry in fine wire iterative application.
(3) Cutting service: Effective delivery in 2023 is about 25.5GW, production capacity has reached 38 GW, and the Yibin (Phase I) 25GW project is expected to be produced in the first half of 2024; long-term cooperative relationships have been established with Tongwei Co., Ltd., Beijing Express, Shuangliang Energy Saving, and Meike Co., Ltd.
(4) Innovative business: As of December 31, 2023, the total amount of orders in hand was 100 million yuan, an increase of 37% over the previous year. Among them, the share of silicon carbide diamond wire slicers is leading, and orders for 8-inch silicon carbide slicers have already been placed. Orders for magnetic equipment have increased dramatically.
Integrated photovoltaic cutting solution leader, slicing foundry+diamond wire opens the second growth curve 1) Cutting equipment: The company leads the market share, benefiting from the iterative process of the industry's thinning demand.
2) Slicing foundry: With the advantage of “cutting equipment+consumables+process”, it already has the mass production capacity of 210 mm standard 100-120 μm silicon wafers, and has innovatively launched a half-rod and half-piece cutting technology route. Currently, it is planned to have a production capacity of 102 GW, and 63 GW is expected to be put into operation in 2024.
3) Cutting consumables: Currently, the company's diamond wire production capacity is about 60 million KM/year, and the production capacity is expected to reach more than 100 million kilometers in 2024. The company leads the diamond wire diameter industry and benefits from the trend of thinning. Leading the industry in the iterative application of tungsten wire thinning.
4) Innovative business: The company's market share of silicon carbide slicers is leading in the industry. The launch of the new 8-inch silicon carbide slicer has already formed batch orders. Magnetic material cutting equipment also signed large orders and was highly recognized by customers.
Investment advice: Optimistic about the company's future cutting equipment+cutting consumables+foundry service. The company's net profit for 2024-2026 is estimated to be 10.4/13.4/1.72 billion yuan, a year-on-year change of -29%/+28%/+28%, corresponding to PE11/8/6 times. Maintain a “buy” rating.
Risk warning: PV production expansion falls short of expectations; competition in chip foundry intensifies; R&D of innovative business equipment falls short of expectations.