Incident Overview

On August 27, 2023, Jingshan Light Machinery released its 2023 semi-annual report: operating income of 3.407 billion yuan for the third year of 2023, up 48.70% year on year; net profit of 244 million yuan, up 65.16% year on year; gross profit margin of 20.94%, up 1 pct year on year; net interest rate 8.27%, up 1.46 pct year on year. The company's performance forecast is expected to achieve net profit of 225 to 265 million yuan in the first half of 2023. The performance is in the middle of the forecast.

In the second quarter of 2023, we achieved operating income of 2,080 billion yuan, up 65.79% year on year, and 56.76% month on month; net profit of 91 million yuan, up 66.21% year on year and 257.71% month on month; gross profit margin of 20.94%, down 0.6 pct year on year; net interest rate of 4.76%, up 0.97 pct year on year.

PV orders are plentiful. Moving from a module to a platform-based supplier of battery equipment in the first half of 2023, the PV intelligent equipment business achieved revenue of 2,686 billion yuan, an increase of 75.51% over the previous year. As of June 30, 2023, the company's PV sector had orders of 9.202 billion yuan (tax included), an increase of 121.41% over the previous year. As of December 31, 2022, the company's PV sector had orders of 5.444 billion yuan (tax included), an increase of 45.56% over the previous year. We calculate that the company's PV sector added 6.44 billion yuan in orders in the first half of 2023. Orders increased rapidly, providing a good guarantee for the company's subsequent performance.

Major customers in the component business and overseas expansion are smooth. In the first half of 2023, Shengcheng PV created industry benchmark project cases for well-known customers such as Jingke, Tianhe, Jingao, and Huansheng at various domestic and foreign bases. The volume of each project reached 5GW. The company is also continuously improving the installation and after-sales service quality of products in overseas markets. Currently, the company's products have been exported to more than 30 countries and regions, and it has set up subsidiaries or technical service centers in Vietnam, Thailand, Turkey, India, Singapore, etc., to further expand its international market share. In the first half of 2023, the company's overall overseas revenue was 858 million yuan, accounting for 25.18%, a significant increase from 15.85% in the same period last year; foreign exchange revenue was 74.7093 million yuan, an increase of 89.80% over the previous year.

Various technology routes have product layouts. The company is the first enterprise in the industry to complete perovskite equipment development and actual product sales. Currently, the company provides MW grade perovskite and overall solutions, and provides GW grade perovskite mass production equipment output and technical support. The company has technology for perovskite/laminated battery test lines and automatic component packaging lines. In the HJT technical route, the company can provide process equipment such as HJT velvet cleaning machines, HJT silicon wafer pre-absorption cleaning equipment, and HJT battery electroplating metallization equipment; in the TopCon technical route, the company can provide velvet making and cleaning equipment, etc.

The packaging equipment business is developing steadily, providing overall solutions

In the first half of 2023, the company's packaging business revenue was 385 million yuan, a year-on-year decrease of 2.2%, accounting for 11.30%, and a gross profit margin of 23.69%, an increase of 3.45 pct over the previous year. Jingshan Light Machinery is one of the earliest domestic companies engaged in R&D, design and production of corrugated packaging equipment. Jingshan Light Machinery has become a recognized domestic first-tier brand in the industry and a world-renowned brand. At present, the company has become one of the companies with the most complete product line in the global industry, providing overall solutions for smart factories in the corrugated packaging industry.

Investment advice

We predict that the company's operating income for 2023-2025 will be 65.00/77.92/8.620 billion yuan respectively, net profit to parent will be 495/630/808 million yuan respectively, and diluted EPS calculated with the current total share capital of 623 million shares will be 0.80/1.01/1.30 billion yuan. The company's current stock price is 20/16/12 times the PE ratio of the EPS forecast for 2023-2025, respectively. Considering that the company is a leader in photovoltaic module equipment, and that the penetration rate of new products in the company's perovskite business is expected to continue to increase, the “buy” rating is maintained.

Risk warning

1) The risk that the subsequent expansion of production in the photovoltaic industry falls short of expectations; 2) the risk of innovation brought about by technology iteration; 3) the risk of uncertainty in new business expansion; 4) the risk of errors in measuring market space; 5) 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.