Material business performance was outstanding. Q4 calculated inventory impairment losses affected profit: In 2023, the company achieved operating income of 17.98 billion yuan, +69% year over year, of which equipment and service revenue was 12.81 billion yuan, accounting for 71% year on year, material revenue 4.16 billion yuan, +186% year on year; net profit to mother 4.56 billion yuan, +56% year on year; net profit without return to mother of 4.38 billion yuan, +60% year on year; 2023Q4 revenue of 4.52 billion yuan, +42% year over month, -11% month-on-month, net profit to mother of 1.04 billion yuan Yuan, +14% year over year, and -20% month over month, mainly because Q4 calculated inventory price drop losses of about 260 million due to prudential principles.
Profitability remained stable, with Crucible's annual net interest rate of about 49%: in 2023, the company's gross margin was 41.7%, +2pct year on year, of which equipment gross margin was 38.9%, year-on-year -2.0pct, materials were 56.2%, +17.2pct year on year; net interest rate of the Crucible business for the full year of 2023 was about 48.5% (Meijing's 2023 annual revenue of 3.67 billion yuan, net profit of 1.78 billion yuan); the period expense ratio was 9.1%, year-on-year -1.4pct, of which sales The cost rate is 0.5%, +0.03 pct year on year, and the management cost rate (including R&D) is 8.7%, -1.5 pct year on year. The company emphasizes R&D investment. The R&D expenses in 2023 are 1.15 billion yuan, +44% year over year, accounting for 6.4% of revenue. R&D projects are concentrated in the field of semiconductor equipment and silicon carbide, with a financial cost ratio of -0.1% and +0.1 pct year over year.
Inventory & contract liabilities are high, and there are plenty of orders in hand: as of the end of 2023, the company's contract debt was 10.72 billion yuan, +13% year over year, inventory was 15.51 billion yuan, +25% year over year. The total number of uncompleted crystal growth equipment and intelligent processing equipment contracts totaled 28.26 billion yuan (tax included), of which 3.27 billion yuan (tax included) had not been completed. We estimate that the company signed about 17.3 billion yuan of new orders for the full year of 2023, +16% compared to 15 billion yuan in 2022.
Photovoltaic equipment: Achieve full coverage of silicon wafers, batteries, and module equipment: (1) fifth-generation low-oxygen monocrystalline furnaces: improving cell efficiency, low-oxygen superconducting magnetic field monocrystalline furnaces are a definite trend; (2) Cell equipment: equipment such as tubular PECVD, LPCVD diffusion, annealing, single-chamber multi-vessel ALD, and boat dry cleaning compatible with BC and TopCon processes has been developed; (3) Component equipment: Strengthen the supply capacity of the entire line equipment for tiled modules.
Jingsheng semiconductor equipment positions large silicon wafers, advanced packaging, advanced manufacturing processes, silicon carbide: (1) Large silicon wafer equipment: Jingsheng is the leading domestic long crystal equipment and can provide overall solutions for long crystal, slicing, grinding and polishing; (2) Advanced packaging: successfully developing a 12-inch triaxial thinning polishing machine and a 12-inch thinning polishing and cleaning all-in-one machine used in wafer manufacturing and advanced packaging; (3) Advanced process: The 8-inch and 12-inch silicon carbide decompression epitaxial growth equipment and ALD equipment developed by the company have entered the verification stage; (4) Epitaxial devices: developed 6-8 inch silicon carbide long crystal equipment, slicing equipment, thinning equipment, polishing equipment and epitaxial equipment, 8-12 inch atmospheric pressure silicon epitaxial equipment, etc., launched double-chip silicon carbide epitaxial equipment. At the same time, in terms of components, Jinghong Precision, a wholly-owned subsidiary of the company, aims to localize nuclear components and continues to strengthen research and development of key components.
Material: layout silicon carbide substrate & quartz crucible & diamond wire: (1) silicon carbide substrate: 8-inch silicon carbide substrate has been mass-produced; (2) quartz crucible: accelerate the increase in crucible production capacity and continue to develop high-quality super crucibles; (3) diamond wire:
The first phase of the mass production project was put into operation and mass sales were achieved, promoting the second phase of the production expansion project and speeding up research and development of tungsten wire.
Profit prediction and investment rating: Photovoltaic equipment is the first curve for Jingsheng's electromechanical growth. The second curve is the volume of photovoltaic consumables and semiconductor consumables, and the third curve is the volume of silicon carbide equipment+ materials and semiconductor equipment. We expect the company's net profit for 2024-2026 to be 56 (original value 58, down 4%) /65 (original value 70, down 7%) /7.3 billion yuan, corresponding PE to 7/6/6 times, maintaining a “buy” rating.
Risk warning: Downstream production expansion falls short of expectations, and new product expansion falls short of expectations.