Key points of investment
2023 Annual Report: Net profit to grow 56%; expected semiconductor and silicon carbide business to accelerate in 2024 1) 2023 performance: The company's revenue was 18 billion yuan, up 69% year on year; net profit to the mother was 4.56 billion yuan, up 56% year on year. Profitability: The company's comprehensive gross profit margin was 41.7%, +2pct year over year, benefiting from the increase in gross margin on the material side (quartz crucible, etc.). The net interest rate was 29.5%, +0.6pct year over year, benefiting from the advantage of scale and maintaining a high level.
2) Revenue by business: Equipment and services reached 12.8 billion yuan, up 51% year on year, gross profit margin of 38.9%, year on year -2 pct; materials reached 4.16 billion yuan, up 186% year on year, gross profit margin of 56.2%, +17.2 pct year on year.
3) Ongoing orders: By the end of 2023, the company had not completed contracts for crystal growth equipment and intelligent processing equipment (mainly photovoltaic equipment) of 28.26 billion yuan, an increase of 11% over the previous year; of these, it had not completed contracts for semiconductor equipment of 3.27 billion yuan, a decrease of 3% over the previous year. An abundance of on-hand orders guarantees an increase in performance in 2024.
4) Progress of each business
(1) Photovoltaic equipment: Silicon wafer end - Launched a fifth-generation monocrystalline furnace based on N-type products to introduce superconducting magnetic field technology into the photovoltaic field. Battery side - Equipment such as tubular PECVD, LPCVD, diffusion, annealing, single-chamber multi-boat ALD, and boat dry cleaning compatible with BC and TopCon processes has been developed. Component side - Strengthen the supply capacity of the entire line equipment for tile-stacked components.
(2) Semiconductor equipment: silicon carbide end - developed 6-8 inch silicon carbide long crystal, slicing, polishing and epitaxial equipment, innovatively launched a double-chip silicon carbide epitaxial device to greatly increase epitaxial production capacity; advanced process end - developed 8-12 inch pressure-reduced silicon epitaxial equipment, LPCVD and ALD, and developed various 12-inch wafer thinning equipment; (3) Materials and precision components: construction of 250,000 6-inch silicon carbide and 50,000 8-inch silicon carbide substrate projects; Tungsten diamond wire, semiconductor valves, magnets Products such as fluids, special fans, exhaust gas treatment devices, etc.
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), 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 12-inch epitaxial, LPCVD, and ALD devices based on advanced manufacturing processes.
Power semiconductor equipment - The company sells single-chip and double-chip 6-inch silicon carbide epitaxial equipment in batches, and successfully developed an 8-inch single-chip silicon carbide epitaxial device with international advanced standards.
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. Equipment side: The company released 6-inch double-chip silicon carbide epitaxial equipment and 8-inch silicon carbide epitaxial growth equipment, leading the industry to accelerate into the 8-inch era.
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 2024-2026 is 57/67.7/7.83 billion yuan, an increase of 25%/19%/16% over the previous year, corresponding to PE 7/6/5 times. 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.