Incident description
Jingsheng Electromechanical released its 2025 quarterly report. 2025Q1 achieved revenue of 3.138 billion yuan, a year-on-year decrease of 30% and a month-on-month increase of 1%; net profit to mother was 0.573 billion yuan, a year-on-year decrease of 46%, reversing losses month-on-month.
Incident Reviews
Q1 revenue declined sharply year over year. Crucible prices are expected to drop year on year, but have stabilized month-on-month. In terms of equipment, the monocrystalline furnace business is expected to be under pressure, but the semiconductor business is following the recovery of the industry. In terms of materials, the crucible business is expected to maintain marginal profit, and the profit level remains industry-leading; silicon carbide shipments are expected to be stable month-on-month, and there is little room for the 6-inch price to drop; sapphire benefits from the boom in demand for secondary LED lamp replacements. Furthermore, demand for semiconductor components is strong, and growth is expected to be relatively rapid.
In terms of profit, Q1 gross margin was 27.6%, down 16.0pct year on year and 4.6pct month-on-month increase. The year-on-year decline was also affected by the decline in crucible prices. The month-on-month increase is expected to be due to product structural factors, indicating that gross margin is stabilizing. The cost rate for the Q1 period was 11.8%, an increase of 2.3 pct over the previous year. Q1 Credit impairment surged back $0.037 billion, which is sufficient for 2024.
Looking ahead to 2025:1) The semiconductor equipment market is expected to maintain double-digit growth, and the company is actively seizing the domestic replacement market.
On the silicon wafer manufacturing side, Changjing equipment leads the domestic equipment market. Crystal processing equipment, wafer processing equipment, epitaxial equipment and cleaning equipment have all been sold in bulk; on the chip manufacturing and packaging side, the company has developed thin film deposition equipment such as 8-12 inch decompression epitaxial equipment and ALD equipment used in chip manufacturing, a 12-inch thinning polishing machine used in advanced packaging; in terms of silicon carbide equipment, the company has developed silicon carbide long crystal and processing equipment, which is in a leading position in the market.
2) The semiconductor substrate material business is progressing actively. Sapphire materials benefit from the demand for secondary replacement of LED lamps, and are expected to achieve a sharp rise in volume and price, and large-scale mass production to the next level; silicon carbide substrates accelerate the transformation to 8 inches, self-supply of equipment and a high degree of automation establish gross margin advantages, forward-looking layout of the AI eyewear consumer electronics market, and accelerate the industrialization of 12-inch optical-grade silicon carbide substrate materials.
3) In terms of semiconductor consumables and components, quartz crucible products have taken the lead in technology and scale. The quartz product field has achieved product expansion and enhanced the collaborative supply capacity of semiconductor consumables; covering the entire product system covering the core components of high-end semiconductor equipment, covering the three core product matrices of cavities and structural parts, functional components, consumables and seals, it has covered leading companies in the industry such as CCME, Shanghai Shengmei, Huahai Qingke, North China Chuang, and Changchuan Technology.
The estimated net profit for 2025 is 2.5 billion yuan, corresponding to PE 14 times, maintaining a “buy” rating.
Risk Alerts
1. The risk that downstream production expansion falls short of expectations;
2. The risk of falling product prices;
3. The risk that the company's new product development progress falls short of expectations.
