Liancheng CNC (835368)
It is estimated that the related party transaction with Longji will be RMB 3.298 billion in 2022, and the procurement demand is late but arrives
On December 13, 2021, the company announced that since the beginning of 2021, the transaction amount with related parties has accumulated 429 million yuan, and it is expected that 3.371 billion yuan will occur in 2022. In terms of related party transactions with core downstream customers Longi Green Energy Technology Co.Ltd(601012) , The contract amount (tax included) signed by the company from January to November 2021 is 419 million yuan, and the sales of equipment and spare parts is 401 million yuan; it is estimated that the contract amount (tax included) signed in 2022 is 3.298 billion yuan, and the sales of equipment, spare parts and auxiliary materials is 3.284 billion yuan. Subject to Longi Green Energy Technology Co.Ltd(601012) Due to the impact of adjusting the project construction schedule, the company’s equipment sales in 2021 did not meet the expectations, and the relevant procurement needs were deferred to 2022, although it was late. Considering the deferral of company orders, We adjusted the forecast of the company’s net profit attributable to the parent company from 2021 to 2023 to 400 (- 0.21) / 6.18 (+ 0.35) / 777 (+ 58) million yuan respectively, and the corresponding EPS was 173 (- 0.10) / 2.68 (+ 0.15) / 3.37 (+ 0.25) yuan / share respectively. The PE corresponding to the current stock price was 71.1/46.0/36.6 times respectively. We are optimistic that the company will benefit from the prosperity of the photovoltaic industry and the production expansion cycle of downstream customers for a long time and maintain the “buy” rating.
The photovoltaic industry continues to boom, deeply binds Longji and enjoys the bonus of production expansion
Under the background of carbon neutralization, the demand of photovoltaic industry continues to rise, photovoltaic manufacturers accelerate the expansion of monocrystalline silicon chip production capacity, and monocrystalline silicon equipment manufacturers benefit fully. According to the company’s calculation, the average annual market demand for monocrystalline silicon core equipment will reach 20.7 billion yuan from 2020 to 2022. The company is the upstream core equipment supplier of the global PV leader Longi Green Energy Technology Co.Ltd(601012) and is expected to grow rapidly with the production expansion cycle of Longi Green Energy Technology Co.Ltd(601012) . Meanwhile, the company actively expanded Shuangliang Eco-Energy Systems Co.Ltd(600481) , Gaojing and other customers, and won 846 million yuan of orders in the bidding of Shuangliang Eco-Energy Systems Co.Ltd(600481) single crystal furnace in May 2021. In the future, driven by multi-dimensional factors such as high industry prosperity, large customer expansion and new customer expansion, the company’s performance is expected to maintain a sustained growth trend.
Capacity expansion ensures supply capacity, and the semiconductor equipment business advances steadily
In 2021, the company expanded its production capacity in Dalian through the adjustment of production layout. The newly-built plants and production facilities in Wuxi have been in normal mass production, and the overall large-scale manufacturing and production capacity have been continuously improved, effectively supporting customers’ demand for new orders. In the field of semiconductor equipment, based on the accumulation of photovoltaic single crystal furnace technology and the digestion and absorption of Kekes technology, the company has developed 8 / 12 / 24 inch semiconductor single crystal furnace and single crystal superconducting magnetic field. At present, it has been delivered to the international top semiconductor silicon wafer factory for trial in small quantities. At the end of October 2021, the first silicon carbide long crystal furnace and synthesis furnace developed by the company were officially offline. At present, the equipment prototype contract has been signed with the leading enterprises in the industry.
Risk tips: industry fluctuation and policy risk, relative concentration of customers and high risk of related party transactions, etc.
