The performance forecast exceeded expectations, and the tight supply and demand of the industry led to a continuous rise in the price of high-purity quartz sand. The company issued a pre-increase announcement on its performance, with an estimated 22-year return net profit of 9.8-1.08 billion yuan, and YoY+248%-285%, exceeded our and market expectations. According to the median of the performance range, the net profit of 22Q4 is 460 million yuan, which is much higher than that of Q3 280 million in a single quarter. We judge that the high month-on-month increase in Q4 net profit is mainly due to the continuous rise in the price of high-purity quartz sand and the production and marketing increment brought about by the release of 20, 000 tons of production capacity from 22H2. According to the feedback from downstream crucible enterprises in December 22, the unit price of imported sand from Yuniming would have been as high as 90,000 yuan / ton without long-term lock-in price. The 21-year average price of quartz sand sold by the company is only 22,000 yuan / ton, the average price of 22H1 is expected to rise to 25,000 yuan / ton, and the average price of 22H2 accelerates.

The demand of photovoltaic quartz sand in 23 years is higher than expected, the competition pattern is much better than other photovoltaic auxiliary materials, and the price elasticity is expected. On the demand side, on the one hand, according to Ji Bang Consulting, the global photovoltaic installed capacity will reach 330-360GW in 23 years, a large increase compared with 22 years; on the other hand, the proportion of Top-con module shipments is expected to increase significantly (Pvinfolink is expected to increase from 7% in 22 years to 25% in 23 years). Compared with PERC batteries, due to the higher purity requirements of silicon rod single crystals, the consumption of high-purity quartz sand per unit installed is significantly increased. The overall market demand will most likely exceed our previous forecast of 103000 tons. Different from other photovoltaic auxiliary materials, the raw materials and preparation process of photovoltaic grade quartz sand have a higher entry threshold, the capacity expansion of the industry is slow and is mainly dominated by the three major suppliers.

Considering the certainty of demand growth and the scarcity of supply, before the large-scale mass production of photovoltaic grade quartz sand, we think that photovoltaic grade quartz sand is not a typical periodic product, but will maintain a tight balance between supply and demand for a long time.

It is proposed to launch the fourth phase of the employee stock ownership plan to highlight the value of long-term investment. The proposed number of participants / subscription size of the draft announcement is no more than 493 people / 183 million yuan respectively, the scale is the largest in history, and the lock-up period / duration is 12 to 24 months respectively. In the first three phases of the employee stock ownership plan, the actual purchase price is taken as the starting point, and the closing price on the end of the lock-up period is taken as the end point. The stock price increases by-8%, 134% and 127%, respectively, and the probability of obtaining high returns is higher. The launch of the fourth phase of employee stock ownership reflects the company's optimistic expectations for the future development of the company, and further binds the common interests of core employees and the company.

The EPS in 22-24 is adjusted to 2.85,7.00 EPS (the original forecast is 7.16pp9.40), which mainly adjusts the unit price and sales volume of high purity quartz sand in the forecast period. According to the segment valuation method, we consider that the optical fiber semiconductor / photovoltaic / light source section will be given an average of 41max 24max 16X PE in 2023, corresponding to the target price of 171.42 yuan, maintaining the "buy" rating risk hint: the price increase of high purity quartz sand / capacity production progress is lower than expected, and the profit is lower than the expected valuation risk.