Key points of investment
Performance continued to grow steadily: in Q1 2024, the company achieved operating income of 4.51 billion yuan, +25% year over year; net profit to mother of 1.07 billion yuan, +21% year over year; net profit after deducting non-return to mother was 1.10 billion yuan, +26% year over year.
The share of high-margin crucibles increased, and profitability increased: 2024Q1's gross margin was 43.5%, +2.9 pct year on year; the net sales margin was 29.8%, +1.7 pct year on year; the period expense ratio was 9.5%, -1.1 pct year on year, of which the sales expenses rate was 0.5%, +0.1 pct year on year, management expenses rate (including R&D) was 9.2%, 1.2 pct year on year, and the financial expense ratio was -0.2%, +0.1 pct year on year.
Inventory & contract liabilities remained stable: as of 2024Q1, the company's contract liabilities were 10.28 billion yuan, +1% year over year; inventory was 15.84 billion yuan, +13% year over year; 2024Q1 net cash flow from operating activities was 120 million yuan, -72% year over year. It is mainly due to the increase in payments to employees in the current period, cash payments and various taxes paid to employees.
Photovoltaic equipment: Achieve full coverage of silicon wafers, batteries, and module equipment: (1) Fifth generation low-oxygen monocrystalline furnace:
Helping improve battery efficiency with low oxygen superconducting magnetic field monocrystalline furnaces is a definite trend; (2) battery equipment: tubular PECVD, LPCVD diffusion, annealing, single-chamber multi-vessel ALD, and boat dry cleaning compatible with BC and TopCon processes; (3) component equipment: strengthening the supply capacity of the entire line equipment for tile-stacked components.
Jingsheng semiconductor equipment positions large silicon wafers, advanced packaging, advanced manufacturing processes, and silicon carbide requires: (1) large silicon wafer equipment: Jingsheng is the leading domestic long crystal equipment, which can provide overall solutions for long crystal, slicing, grinding and polishing; (2) advanced packaging: has laid out thinning machines; (3) advanced manufacturing processes: 8-12 inch pressure-reduced silicon epitaxial equipment, LPCVD, and ALD; (4) silicon carbide epitaxial equipment: has developed 6-8 inch silicon carbide long crystal equipment, slicing equipment, and polishing equipment Equipment and epitaxial equipment, 8-12 inch atmospheric pressure silicon epitaxial Equipment, etc., launched a two-piece silicon carbide epitaxial device.
Material: Layout silicon carbide substrate & quartz crucible & diamond wire: (1) silicon carbide substrate: 8-inch silicon carbide substrate has been mass-produced; (2) quartz crucible: accelerate the increase in production capacity of crucibles and continue to develop high-quality super crucibles; (3) Diamond wire: the first phase of the mass production project was put into operation and achieved mass sales, promoting the second phase of the production expansion project and speeding up the development of tungsten diamond wire.
Profit prediction and investment rating: Photovoltaic equipment is the first curve for Jingsheng's electromechanical growth. The second curve is the volume of photovoltaic consumables and semiconductor consumables, and the third curve is the volume of silicon carbide equipment+ materials and semiconductor equipment. We maintained the company's 2024-2026 net profit of 56/65/73 billion yuan, corresponding PE of 7/6/5 times, and maintained a “buy” rating.
Risk warning: Downstream production expansion falls short of expectations, and new product expansion falls short of expectations.