Incident: The company recently released its 2023 annual report. In 2023, the company's revenue surged 258.46% year on year to 7.2 billion yuan, net profit to mother surged 378.92% year on year to 5 billion yuan, and net profit after deducting non-return to mother surged 404.85% year on year to 5 billion yuan. It is proposed to distribute a cash dividend of 57 yuan (tax included) to all shareholders for every 10 shares, increase the share capital through the capital reserve fund, and increase 5 shares for every 10 shares.
Comment:
Sales of quartz sand declined slightly year on year, prices soared, and revenue and profit increased dramatically.
1) The company exported 30054 tons of quartz sand in 2023, a slight decrease from 30,836 tons in 2022. We estimate that the price of quartz sand sold by the company in 2023 was as high as 196,600 yuan/ton, which is a huge increase from 39,400 yuan/ton in 2022.
2) The sharp increase in the company's revenue was mainly due to a sharp rise in the price of quartz sand. Since the cost of tons only increased from 801,000 yuan/ton to 11,400 yuan/ton in 2022, the company's gross margin of quartz sand increased to 94.22%, and net profit to mother increased sharply to 5 billion yuan.
Photovoltaic quartz sand is a profit stabilizer, and semiconductor quartz is emerging.
1) High-purity quartz sand has become a “sought-after resource” in the industry, and the importance of quartz resources is increasingly recognized. The gross margin of the product reached 94.22% in 2023, which seems to be the company's profit stabilizer; 2) The company's various series of new semiconductor quartz products have emerged, and the company has accelerated the certification process for major semiconductor quartz equipment vendors and terminal chip manufacturers, and the specifications of certified products are constantly increasing. In 2023, the company's optical fiber semiconductor segment achieved a year-on-year increase of 34.56% in revenue, and gross margin reached 67.12%, up 12.25 pcts year-on-year. Sales of quartz products have increased dramatically, and the market share continues to increase.
Give it an “better than the market” rating. The company's quartz sand benefits from the high photovoltaic boom, limited supply, high prices, high profit levels, and a marked increase in the 2023 dividend ratio. We expect net profit to be 65.84, 79.89, and 9.347 billion yuan respectively from 2024 to 2026, corresponding EPS of 18.22, 22.11, and 25.87 yuan/share, respectively. Due to the high profit position of quartz sand, we conservatively give the company 8-9 times PE in 2024, corresponding to a reasonable value range of 145.76 to 163.98 yuan, giving it a “superior to the market” rating.
Risk warning. The supply of quartz sand has been released a lot, and breakthroughs have been made in synthetic quartz sand technology to increase supply.