Incident description
Jingsheng Electromechanical released its 2024 annual report, achieving revenue of 17.577 billion yuan in 2024, a year-on-year decrease of 2.26%; of these, 2024Q4 achieved revenue of 3.099 billion yuan, a year-on-year decrease of 44.93%; among them, achieved revenue of 3.099 billion yuan, a year-on-year decrease of 31.47%, a year-on-year decrease of 28.45%; and net profit to mother of -0.45 billion yuan, a year-on-year decrease of 152.13%.
Incident Reviews
The year-on-month decline in Q4 revenue is expected to be due to a drop in crucible prices. The photovoltaic industry is still at the bottom of the cycle, dragging down the company's performance. Semiconductor equipment revenue followed the industry's recovery. At the end of last year, on-hand orders exceeded 3.3 billion yuan (tax included); sapphire revenue benefited from a rapid year-on-year increase in demand for secondary LED lamp replacements; the silicon carbide substrate business accelerated its transformation to 8 inches, and shipments continued to rise.
In terms of profit, the gross profit margin of the manufacturing business in 2024 was 34.82%, down 8.20pct year on year; among them, the gross profit margin of equipment and services was 36.36%, down 2.46 pct year on year; the gross profit margin of materials was 28.71%, down 27.44pct year on year, which is expected to be due to a sharp drop in crucible prices. In 2024, the company fully accrued impairment, with asset impairment and credit impairment totaling about 1.2 billion yuan. Of these, 0.25 billion yuan was prepared for individual customer accounts receivable, 0.341 billion yuan was prepared for inventory price reduction when issuing products, and 0.349 billion yuan was prepared for inventory price reduction of raw materials for quartz crucibles, etc. Since impairment is mainly concentrated in Q4, it has a big impact on net profit attributable to Q4.
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 15 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
