Incident: Shanghai Silicon Industry issued the “Notice on Investing in the Construction of a 300mm Silicon Wafer Production Capacity Upgrade Project”. It plans to invest in the construction of a 300mm silicon wafer production capacity upgrade project for integrated circuits. After completion, it will add 600,000 wafers/month of 300mm silicon wafer production capacity, with an estimated total investment of 13.2 billion yuan. The project will be divided into the Taiyuan project and the Shanghai project. Among them, the Taiyuan project plans to build a production capacity of 600,000 pieces/month (including heavy iron) and a cutting and polishing production capacity of 200,000 pieces/month (including heavy iron); the Shanghai project plans to build a cutting and polishing production capacity of 400,000 pieces/month. If we calculate the purchase cost of a monocrystalline furnace corresponding to the monthly production capacity of 10,000 12-inch silicon wafers and the “Response to Feedback on Non-public Stock Offering Application Documents (Revised Draft)”, the purchase cost of a monocrystalline furnace with a monthly production capacity of 10,000 12-inch silicon wafers is approximately RMB 16.7787 million, then the cost of constructing a monocrystalline furnace with a monthly production capacity of 600,000 wafers of 12-inch silicon wafers exceeds 1 billion yuan.
Jingsheng Co., Ltd. is one of the earliest companies in China to develop 12-inch semiconductor-grade monocrystalline silicon furnace products.
The company's important customers include Shanghai Silicon Industry (Shanghai Xinsheng), Liangwei (Jinruihong), and Shengong Co., Ltd., which have cooperated steadily with Shanghai Silicon Industry since 2015. Shanghai Xinsheng took the lead in large-scale production and localization of 12-inch semiconductor silicon wafers in China. In 2018, the company's 12-inch semiconductor-grade monocrystalline silicon furnace passed Shanghai Xinsheng's inspection, and the localization of 12-inch semiconductor-grade monocrystalline silicon furnaces was realized. The company's semiconductor-grade monocrystalline silicon furnace equipment specifications and crystal growth control index parameters are on par with international standards. At the end of 2022, the domestic market share of 12-inch semiconductor-grade monocrystalline silicon furnaces was about 9% to 16%, leading the country. The company's share is expected to maintain its lead and continue to grow, supported by advantages such as customers, technology, and early release bureau.
The SiC layout is deepening, and the company has great opportunities for development under the trend of expanding production. According to the “Response Comments from Issuers and Sponsors of Jingsheng Co., Ltd.”, the domestic SiC substrate production capacity is expected to increase by 469.6 to 5.371 million pieces/year in 2 to 5 years, and the domestic SiC single crystal furnace market can add 9392 to 14,323 units. Based on the calculation of 60 to 1.1 million yuan for a single furnace, the domestic SiC monocrystalline furnace market will increase space of about 56.35 to 15.755 billion yuan by 2027. The company's Changjing furnace accounts for about 27% to 29% of the domestic market, ranking at the top. At the same time, new products such as CVD equipment and cutting equipment are already in the R&D and testing stages, and the layout continues to be deepened around the industrial chain.
Profit forecast: The company's net profit from 2024 to 2026 is expected to be 1.14/1.60/192 million yuan, +61.1%/39.7%/20.3% year-on-year, maintaining the “gain” rating.
Risk warning: Product acceptance causes fluctuations in operating performance, fluctuations in gross margin, and downstream development falling short of expectations.