Kaide quartz (835179)
What is the business proportion of the company in the photovoltaic & semiconductor industry chain? The whole quartz industry chain can be mainly divided into: quartz sand → quartz materials → quartz products (the company’s industry) → terminal application market. The company’s main products include quartz glass products such as quartz pipes, quartz boats and quartz instruments, which are mainly used in the fields of Semiconductors (accounting for 56%) and photovoltaic Cecep Solar Energy Co.Ltd(000591) (accounting for 43%), and the application links are mainly oxidation, diffusion, CVD, etc. The company has more than 200 customers in China. Its main customers can be divided into chip manufacturing customers, equipment manufacturers, research institutes and other types, mainly including Jilin Sino-Microelectronics Co.Ltd(600360) , Yangjie electronics, Tongmei crystal, Naura Technology Group Co.Ltd(002371) , Shenzhen S.C New Energy Technology Corporation(300724) . The raised investment project of the company is the industrialization of high-end quartz products, with a total investment of 500 million yuan and a proposed raised investment of 270 million yuan. In the future, the layout of the company will focus on medium and high-end products.
What about moats and barriers to competition? The quartz processing industry is a labor-intensive industry. Kaide quartz has a large number of production personnel, up to 143 in 2021h1, and half of the fire processing technicians have more than 10 years of experience. Mr. Zhang Zhongshu, chairman of the company, is a senior quartz glass technician in China. He has rich experience and has trained a large number of excellent quartz processing technicians in the industry for the company. In addition, the company has thousands of square meters of high-end quartz production workshop, of which the 100000 fire processing workshop is more than 400 square meters, which can meet the production and operation of 20 people at the same time. The unique exhaust and purification system can meet the production needs of 8-inch and 12 inch high-end quartz products. The equipment used by the company is the same as that of foreign-funded quartz enterprises, and is at the leading level among enterprises in the same industry in China. The threshold of quartz processing for semiconductors is usually high. The certification process of downstream semiconductor customers is an important prerequisite for entering the mainstream supply system. The whole certification time of high-end products is usually 1-2 years. The company is the first domestic enterprise in China to pass the quartz crystal boat certification of Semiconductor Manufacturing International Corporation(688981) 12 inch core parts. At present, it is carrying out Tel’s 8-inch product certification.
Demand side: what is the demand judgment of the photovoltaic semiconductor industry chain for quartz glass products? In the photovoltaic industry chain, quartz crucibles in quartz products are mainly used as consumables in the process of refining single / polycrystalline silicon and Cecep Solar Energy Co.Ltd(000591) cell production. The national “double carbon” policy is actively guiding the adjustment of energy structure and the development of photovoltaic industry. It is expected that the proportion of photovoltaic power generation will rise from 11% in 2020 to 27% in 2030. It is predicted that China’s photovoltaic installed capacity will rise from 253gw in 2020 to 5000gw in 2050. With the steady growth of photovoltaic installed capacity in the future, the demand side of quartz products for photovoltaic will also increase in the same proportion. In the semiconductor field, quartz products are mainly used in monocrystalline silicon manufacturing and wafer manufacturing. From 2014 to 2020, the sales volume of China’s semiconductor industry increased from 301.54 billion yuan in 2014 to 884.8 billion yuan in 2020. At present, China’s wafer fab is gradually expanding into production. In the 2018-2022 year, the Chinese mainland’s silicon wafer production capacity growth rate (CAGR to 14%) is higher than that of the world. The 65nm production process of 12 inch silicon wafer in planning capacity accounts for 60%. According to the latest news from China fab, TSMC is planning to expand the 28nm capacity of Nanjing plant in Chinese mainland. Semiconductor Manufacturing International Corporation(688981) built a 28nm process, 12 inch wafer factory in Beijing. With the gradual expansion of wafer factories and the active promotion of policies, quartz products for semiconductors are expected to develop at a high speed. According to the company’s prospectus, in 2020, the global quartz products market scale was about 29.160 billion yuan, of which the photovoltaic field accounted for about 7%, with a scale of 2.041 billion yuan, and the semiconductor field accounted for about 65%, with a scale of 18.953 billion yuan. On the whole, quartz glass products are gradually developing in the direction of “pure, fine, clean, large and specialized”.
Supply side: the competition pattern of quartz glass processing industry outside China and the future capacity layout of Chinese enterprises? Overseas leading enterprises rely on technological advantages to occupy the main market share in high-end fields such as semiconductor, aerospace and photovoltaic. The main industry giants include: Applied Materials in the United States, Holly’s in Germany, shinyue in Japan, Chongyue in Taiwan, etc. The market of quartz glass products industry is relatively subdivided. Among them, there is little technical difference between 4-inch, 6-inch and other low-end quartz glass products suppliers, and the competition is fierce. Especially for quartz products used in light source industry and photovoltaic industry, the overall threshold is low; High end quartz products are the basic raw materials used in 8-inch and 12 inch semiconductor integrated circuits. The semiconductor industry continues to develop rapidly, bringing a large demand for high-end quartz products in the market. China’s high-end quartz products started late, mainly relying on imports, and the degree of localization is low. It is imperative to replace the semiconductor industry and key basic materials in China in the future. China’s quartz products processing enterprises are mainly Hubei Feilihua Quartz Glass Co.Ltd(300395) Shichuang, dongke quartz, Kaide quartz and Qianghua shares. Among them, Hubei Feilihua Quartz Glass Co.Ltd(300395) Shichuang and Kaide quartz are large-scale in China’s quartz products industry, ranking the top two in market share.
The company’s net investment income is expected to be rmb16.5 billion and rmb2022.5 billion, respectively. At present, A-share comparable companies correspond to the valuation level of pe42x in 2022. Considering the accelerated release of the company’s production capacity from 2022 to 2023 and significant advantages in customer structure, we give the company slightly higher than the valuation level of the same industry (pe45x), corresponding to the target market value of 2.1 billion and the target price of 28 yuan, and give a Buy-A rating.
Risk tip: increased competition in the industry, risk of economic downturn, and risk of chip demand falling short of expectations
