Incident Overview

On August 21, 2024, Jingshan Light Machinery released its 2024 semi-annual report: in the first half of 2024, the company achieved operating income of 3.99 billion yuan, up 17.08% year on year; net profit to mother was 0.27 billion yuan, up 10.58% year on year; gross margin was 19.61%, down 1.33 pct year on year; net interest rate to mother was 6.77%, down 0.40 pct year on year.

In the second quarter of 2024, the company achieved operating income of 1.958 billion yuan, down 5.90% year on year; net profit to mother was 0.14 billion yuan, down 26.67% year on year; gross margin was 19.63%, down 2.16 pct year on year, up 0.04 pct month on month, and net interest rate was 7.15%, down 2.03 pct year on year, up 0.75 pct year on month.

The overall growth rate of photovoltaic equipment was maintained, and the profitability of other businesses increased, and the performance split by sector in the first half of 2024:

1) PV equipment: Sales revenue of 3.102 billion yuan, up 15.47% year on year, gross margin was 18.59%, down 2.87 pct year on year, accounting for 77.75% of total revenue.

2) Packaging equipment: sales revenue of 0.437 billion yuan, up 13.47% year on year, gross margin was 26.98%, up 3.28 pct year on year, accounting for 10.95% of total revenue.

3) Other business: sales revenue of 0.451 billion yuan, up 34.13% year on year, gross margin was 19.48%, up 5.93 pct year on year, accounting for 11.30% of total revenue.

Global layout of photovoltaic equipment, growth of the entire packaging equipment plant project

1. Photovoltaic equipment business

Affected by industry sentiment, new orders declined, and on-hand orders were generally abundant. As of June 30, 2024, the company's PV sector had active orders of 8.667 billion yuan (tax included). We estimate that the company added 2 billion yuan of new orders in the first half of 2024, down from the same period last year.

Component equipment deepens global layout. The company has set up a subsidiary in Dallas, USA, and has provided nearly 30 automated production lines for photovoltaic modules in the US; Shengcheng PV has joined hands with top Italian companies to build the largest photovoltaic factory project in Europe. The total production capacity of all modules can reach 3GW per year. The business has covered nearly ten European countries including Italy, Germany, and France, and has set up European technical service centers; actively expanding emerging markets such as Southeast Asia, India, and the Middle East. In the first half of 2024, Shengcheng PV created industry benchmark project cases for well-known customers such as Jinko, Tianhe, Jingao, and Huansheng at various domestic and foreign bases. The volume of each project reached 5GW.

Perovskite lines and single equipment continue to break through. In terms of complete line equipment, the company completed delivery of the perovskite single junction and laminated solar cell line equipment project, and successfully inspected the company's first perovskite laminated battery line equipment. In the first half of 2024, the company achieved a breakthrough in its core large-scale, mass-produced equipment: it received orders for GW grade PVD sputtering equipment from leading companies; developed mass production equipment for spatial atomic deposition films with large production capacity and large width characteristics and its supporting processes; completed the parallel line of large linear evaporation equipment for perovskite, and successfully developed a perovskite layer co-steamer, and received orders from customers.

2. Packaging equipment business

In 2024, the company received multiple factory project orders, covering all product lines such as corrugated board production lines, printers (traditional printers/digital printers), and whole plant logistics, further improving overall competitiveness. The company has continuously taken measures to increase efficiency and reduce costs, focus on the middle and high-end markets, optimize supply chain management and production processes, and effectively promote the improvement of the gross margin level of the packaging equipment business.

Investment advice

Considering the slight reduction in industry sentiment, it is predicted that the company's revenue for 2024-2026 will be 8.223/8.369/9.736 billion yuan (9.105/11.049/11.214 billion yuan before adjustment), and net profit to mother will be 0.54/0.607/0.748 billion yuan (0.546/0.738/0.8 billion yuan before adjustment), which is diluted based on the current total share capital of 0.623 billion EPS is 0.9/1.0/1.2 yuan. The company's current stock price maintains a “buy” rating with PE multiples of the 2024-2026 forecast EPS being 11/10/8 times, respectively.

Risk warning

1) The risk that the subsequent expansion of production in the photovoltaic industry falls short of expectations; 2) the risk of innovation due to technological iteration; 3) the risk of uncertainty in developing new business; 4) the risk of errors in measuring market space; 5) the risk that the information based on the research is not updated in a timely manner and does not fully reflect the company's latest situation.