The company's revenue for the first three quarters of 2024 was 14.48 billion yuan, +7.6% year-on-year, and net profit to mother was 2.96 billion yuan, -15.8% year-on-year, after deducting non-net profit of 2.92 billion yuan, or -11.7% year-on-year. Among them, revenue for the third quarter was -14.34% YoY, net profit to mother was -33.96% YoY, and after deducting non-net profit YoY, -33.06% YoY. As of 24Q3, the company's contract debt was 6.585 billion yuan, and inventory was 12.545 billion yuan, all down from the end of the second quarter. The company's net profit in the third quarter was mainly due to a significant decline in quartz crucible prices and gross margin.

Judging from the company's profit performance, 2024Q3's gross profit margin was 32.24%, +0.46pct month-on-month; net profit margin was 19.64%, +1.07pct month-on-month. Profitability stabilized month-on-month, mainly due to the company's operation adopting a quality-for-quantity strategy to stabilize overall gross margin by controlling order and customer quality.

In terms of semiconductor equipment, the company's large silicon wafer equipment category continues to expand. Currently, it has achieved full coverage in 8-12 inch crystal growth, slicing, polishing, polishing, CVD, etc., and the continuous expansion of the product line and customer range has driven the company to steadily lead the domestic market share of large silicon wafers. In the future, the company is expected to benefit from the continuous expansion of production of 12-inch silicon wafers; in the field of power semiconductor equipment, the company's 6-inch silicon carbide epitaxial equipment has been sold in batches, and has successfully developed 8-inch silicon carbide epitaxial growth equipment, waiting to be released in advanced manufacturing; In the field, the company adheres to technology Differentiated competitive routes have been accelerated to major domestic customers. 12-inch silicon decompression epitaxial growth equipment has been successfully shipped, and ALD equipment is in the verification stage.

In terms of photovoltaic equipment, in the context of inventory removal and increased competition in the photovoltaic industry, on the one hand, the company strictly manages inventory and cash flow, while controlling customer quality and order quality; on the other hand, the company continues to lead technological innovation, successfully achieve breakthroughs in battery equipment exports, and is also expected to lead a new trend. Rich management experience and adhering to a competitive path of technological differentiation are expected to lead the company through the industry cycle.

In terms of materials, 1) in the field of silicon carbide substrates, the company continues to invest heavily to rapidly climb the 8-inch silicon carbide substrate production capacity while actively expanding domestic and foreign customers; 2) sapphire materials achieve rapid growth driven by industry recovery and secondary replacement demand; 3) In the field of quartz crucibles, the company leads the domestic semiconductor crucible market. Although affected by a sharp decline in PV crucible profits, its market share is expanding against the trend.

Investment advice and profit forecasting

We estimate that the company's net profit for 24-25 will be 4.67 billion yuan and 5.41 billion yuan, corresponding PE of 10.42/9.00X, respectively, to maintain an investment rating of “increased holdings”.

Risk warning

Downside risks: Downstream demand falls short of expectations, the competitive landscape of the industry deteriorates, new materials are slowly developing upward risks: demand for downstream equipment exceeds expectations, silicon carbide cost reduction exceeds expectations, and demand for core consumables exceeds expectations.