In recent years, the quality of photovoltaic quartz crucible has declined obviously, which will have a certain impact on silicon wafer production, and the core of crucible quality depends on the quality of high-purity sand. Quartz shares have a leading advantage in the production of middle and inner layer sand due to the long-term accumulation of ore source acquisition and purification technology, while domestic small and medium-sized enterprises are more difficult to produce middle and inner layer sand that meet the requirements and maintain the company's "buy" rating.

The problem of quality decline of photovoltaic quartz crucible is more and more obvious. According to the report of SMM Photovoltaic Express on January 30, a silicon wafer enterprise leaked silicon material due to the quality problem of superimposed crucible caused by power outage in some factory buildings, and its wafer discharge and external shipments were temporarily reduced in February. Wafer discharge is expected to affect about 150 million wafers, and external shipments are expected to be about 200 million wafers, and the signing of orders for some battery wafers is affected.

The core behind the quality of quartz crucible lies in the quality of high purity sand. The long-life and high-quality quartz crucible requires high bubble, purity and consistency of high-purity sand. On the one hand, for the inner sand, the inner sand of the crucible is in direct contact with silicon, which has a direct impact on the crystal drawing process. Therefore, the quality of high-purity sand is the highest. Generally, imported sand or quartz shares are mainly used in inner sand. Domestic small and medium-sized enterprises need to improve because of unstable ore source and purification technology. It is difficult to produce high quality inner sand. On the other hand, for the outer sand, in the process of using the crucible for more than 300 hours, if the quality of the outer sand is too poor, it will also cause impurities to slowly infiltrate into the inner layer of the crucible and affect the crystal drawing efficiency, so the quality of the outer sand will also affect the quality of the crucible. On the whole, the quality core of quartz crucible depends on the quality of high-purity sand. Considering the limited capacity increment of imported sand and quartz shares in 2023, the scarcity of high-quality quartz sand is expected to become more and more prominent.

The fourth phase of the employee stock ownership plan demonstrates confidence in medium-and long-term development. On January 31, the company announced the fourth phase of the employee stock ownership plan. the total number of participants in this plan does not exceed 493, including 9 directors, supervisors and senior managers of the company, and the cumulative number of shares involved does not exceed 10% of the total share capital of the company. the lock-up period of the shareholding plan is 12 months. Compared with the previous three shareholding plans of the company, this plan covers a wider range of employees and involves more middle managers, core technicians and other personnel, which will further enhance the enthusiasm of the company's staff as a whole. it also shows that the company has confidence in medium-and long-term development.

Risk factors: the demand for photovoltaic and semiconductors is lower than expected; the progress of the company's new production capacity is not as expected; and competition on the supply side of the industry is intensified.

Profit forecast, valuation and rating: considering the expectation of more shortage of high purity sand and optimization of product structure in the coming year, the company's cost-side control is excellent. We maintain the company's EPS forecast of 2.78 EPS in 2022-2024, taking into account the company's 2022-2024 performance is expected to achieve an average annual compound growth rate of more than 40%, and Oujing Technology, which is both upstream and downstream of the industrial chain, has an PE valuation of more than 25x in 2023. But quartz shares as upstream resource products, profits are more volatile, so give a certain valuation discount, we give the company 2023 PE25x, maintain the target price of 190 yuan, maintain the company's "buy" rating.