The company's recent situation

On June 15, the company issued an announcement. The board of directors of the company agreed to terminate the spin-off of its subsidiary Meijing New Materials to the GEM listing on the Shenzhen Stock Exchange and withdraw the relevant listing application documents.

reviews

We have sufficient capital to ensure the steady development of Meijing. The company's announcement stated that the termination of this spin-off will not have a substantial impact on the company, will not have a significant adverse impact on the company's current production and operation activities and financial situation, and will not affect the implementation of the company's future strategic plans. We believe that the company currently has sufficient capital to guarantee the future development of the crucible business. The current production capacity of crucibles is ~18,000 units/month. At the same time, the company currently holds 57.84% of the company's consumables business revenue. This termination also avoids dilution of net profit to mother to a certain extent. In 2023, Meijing New Materials achieved revenue of 3.671 billion yuan and net profit of 1,778 billion yuan, contributing a lot to the company's performance growth.

The market is concerned that the crucible business is under pressure, and the actual profitability of the company remains steady. Affected by poor downstream silicon wafer profits and operating rates in the second quarter, we expect the short-term growth of the company's photovoltaic crucible business. In terms of volume, poor downstream profits will limit sales to a certain extent; in terms of price, according to the powder technology network, the current price of 36-inch crucibles is 15,000 to 16,000 yuan/unit, down from last year and Q1. We believe that the company's raw material reserves and leading technology are expected to guarantee profitability. We expect Crucible's gross margin to maintain a level similar to that of equipment at the current price level, leading the industry.

Technology drives the company's long-term development. The company originated from the Zhejiang University doctoral team, adheres to technological leading+scale leadership, deeply involved in the fields of photovoltaics and semiconductors, and led technological transformation in the industry. The main photovoltaic industry focuses on the comprehensive layout of “equipment+consumables”. Module equipment, tungsten diamond wire, and silicon wafer equipment continue to innovate, and battery equipment is also being developed and verified with many leading companies in the industry. The semiconductor field has been invested for many years, laying out large-scale silicon wafer equipment, advanced process equipment, components, etc. Recently, Shanghai Silicon plans to expand production of 600,000 wafers per month. Jingsheng has previously cooperated with Shanghai Silicon and is focusing on beneficial opportunities. At the same time, emphasis is placed on the development opportunities of third-generation semiconductor silicon carbide substrate materials+equipment. 8-inch cars are leading in technology and new equipment are continuously introduced to fill the gap in domestic production.

Profit forecasting and valuation

The profit forecast for 2024 and 2025 remains unchanged. The current stock price corresponds to the 2024/2025 price-earnings ratio of 7.9x/6.6x. Maintaining an industry rating and a target price of 43.00 yuan, corresponding to 10.2 times the price-earnings ratio of 2024 and 8.4 times the price-earnings ratio of 2025, there is 27.9% upside compared to the current stock price.

risks

There is a risk of technology iteration, and the downstream production expansion progress is lower than expected.