Description of the event
2024Q1's revenue was 4.51 billion yuan, +25.28% year on year, net profit attributable to mother was 1.07 billion yuan, +20.65% year on year, after deducting non-net profit of 1.02 billion yuan, up 26% year on year, and non-recurring profit and loss was -032 million yuan.
Incident comments
Performance continued to grow, and the materials sector drove an increase in profit margins. Thanks to the continuous acceptance of equipment orders and the volume of material business, the company's revenue and net profit to mother continued to grow. The 2024Q1 gross profit margin was 43.52%, up 2.91% year on year, and the net profit margin was 29.76%, up 1.66 pct year on year. The increase in profitability was mainly due to the continued expansion of materials businesses such as quartz crucibles. As the share of revenue from the materials business expands, the company's overall profitability is expected to increase further. 2024Q1 Non-recurring profit and loss is negative, mainly due to fluctuations in stock prices in the secondary market, causing the company's investment losses.
The equipment is in hand and there are lots of orders. By the end of 2023Q4, the company had not completed contracts for crystal growth equipment and intelligent processing equipment totaling 28.258 billion yuan, of which the semiconductor equipment contract had not been completed, 2024Q1 had inventory of 15.838 billion yuan, which continued to grow, and the contract debt was 10.275 billion yuan. Although the month-on-month decline, it remained high, and the company's overall on-hand order amount remained high.
For photovoltaic equipment, the company continues to develop new products. The silicon wafer side has developed a fifth-generation monocrystalline furnace based on N-type products, introducing superconducting magnetic fields to create differentiated core competitiveness. On the battery side, new product processes for photovoltaic cell equipment such as tubular PECVD, LPCVD, diffusion, annealing, single-chamber multi-boat ALD, and boat dry cleaning have been rapidly promoted. Related equipment has been verified by mainstream manufacturers in the industry. On the module side, the entire supply capacity of the tile stacking equipment production line has been realized, and large-scale orders have been obtained. More product layouts enhance the company's competitiveness and ability to withstand cyclical fluctuations, and also lay the foundation for the rapid development of the next cycle.
In terms of semiconductor equipment, we have successfully developed and sold 8-inch and 12-inch atmospheric pressure silicon epitaxial growth equipment, and released 8-inch single-chip and double-chip silicon carbide epitaxial growth equipment with international advanced standards. We have successfully developed optical measuring equipment for measuring the amount of silicon carbide substrates and epitaxial sheets, and realized the localization of silicon carbide quantity testing equipment. Successfully developed a 12-inch triaxial thinning polisher and a 12-inch thinning polishing and cleaning all-in-one machine for wafer manufacturing and advanced packaging. In the field of advanced manufacturing processes, 8- and 12-inch silicon decompression epitaxial growth equipment and ALD equipment have successively entered the verification stage.
The scale of the new materials industry increased rapidly, opening a second growth curve. The company has established a product system focusing on high-purity quartz crucibles, diamond wire, sapphire, SiC substrates, semiconductor valves, pipe fittings, magnetic fluids, and precision components, and has developed products such as synthetic sand quartz crucibles and a new generation of diamond wire. For quartz crucibles, the company has accelerated the increase in production capacity, and the business is expected to grow further; in the diamond wire sector, the first phase of the mass production project was put into operation and mass sales were achieved, actively promoting the construction of the second phase of the production expansion project. SiC yield increased rapidly, and a “project with an annual output of 250,000 6-inch and 50,000 8-inch silicon carbide substrates” was built and put into operation. The core quality parameters of mass-produced 6-inch and 8-inch wafers reached industry-leading levels, and they were shipped in batches. With the release of production capacity in various businesses, the materials business is expected to grow further in 2024.
The company's net profit for 2024-2025 is estimated to be $55.6, 61.1, and 6.71 billion yuan respectively, corresponding to PE of 8, 7, and 6 times, respectively, maintaining a “buy” rating.
Risk warning
1. The risk that downstream production expansion falls short of expectations;
2. The risk that the company's new product development progress falls short of expectations;
3. The risk of on-hand order fulfillment.