Jiangsu Pacific Quartz Co.Ltd(603688) (603688)
Key investment points
It is proposed to acquire 51% equity of Qiangbang quartz to further enhance the scale advantage of high-purity quartz sand
On January 4, the company issued an announcement on foreign investment. The company plans to transfer 51% of the equity of Jiangsu Lianyungang Port Co.Ltd(601008) Qiangbang quartz products Co., Ltd. held by Duan Jingqiang and Mr. duanjingbang at the price of 51 million yuan. The company plans to sign the equity transfer agreement with the target company and its shareholders, Mr. duanjingqiang and Mr. duanjingbang. After negotiation, the target company is valued at RMB 100 million. Based on the financial indicators at the end of the 20th year, the corresponding PE and Pb valuations of the target company are 48.2 times and 16.3 times. The source of acquisition funds is its own funds. After the transaction, the company holds 51% of the shares, and Qiangbang quartz will become the holding subsidiary of the company. The purpose of this transaction is to further expand the company’s production scale of high-purity quartz sand, meet the demand of downstream high-purity quartz sand, and enhance the company’s competitive advantage in the production of high-purity quartz sand.
Performance commitment will increase the listed company’s net profit of no less than 10 million yuan in 2022
According to the contract, Party B (Mr. Duan Jingqiang and Mr. Duan Jingbang) specially promises that the net profit of the target company in 2022 will not be less than RMB 10 million. If the target company fails to meet the standard due to Party B, Party B shall compensate Party A, The compensation amount is 10 million yuan, multiplied by 10 (i.e. the compensation amount = (10 million yuan – the audited net profit amount of the target company in 2022) * 10), and the compensation will be in place before June 30, 2023. After the investment, the company can further integrate the existing production and operation, technology R & D, market channel integration and operation management of the target company, give full play to the company’s existing advantages in the field of high-purity quartz sand, and strengthen and optimize the company’s Quartz upstream industrial chain.
The sales volume of high-purity quartz sand is expected to maintain a high increase, and the price still has room to rise
High purity quartz sand industry has high barriers and good competition pattern. In addition to the two foreign-funded enterprises unimin / Norway TQC, the company is the third enterprise in the world and the only enterprise in China that can supply high-purity quartz sand in batches, with strong competitiveness. Benefiting from the rapid growth of photovoltaic installed capacity and the conversion of photovoltaic cells from p-type to n-type, the demand for high-purity quartz sand is expected to usher in explosive growth, and the company will directly benefit. In the case of capacity shortage during the year, we believe that the company can still further improve its external sales by means of external procurement / tapping the potential of old capacity. We expect that the company’s production capacity of 20000 tons of high-purity quartz sand is expected to be put into operation in 22q1. With the release of new production capacity, the sales volume is expected to continue to maintain a high growth. Calculation of supply and demand balance of high-purity quartz sand: the global supply of high-purity quartz sand is expected to be 4.8/6.6 in 21-23 years/ 87000 tons, the demand is 51 / 6.8 / 89000 tons, and the supply-demand gap is – 0.3 / – 0.2 / – 2000 tons. In terms of price, benefiting from the high prosperity of the industry, considering that the company has many long-term association orders, we judge that with the re signing of the long-term association order price, the price of high-purity quartz sand still has room for improvement. Affected by the rising price of raw ore / other raw materials, the cost side will gradually rise. We believe that the company can deal with it by raising the price / purchasing raw materials through multiple channels. It is expected that the gross profit per ton of the company’s high-purity quartz sand business is expected to continue to increase.
Certification continues to advance, and semiconductor quartz materials are expected to continue in large quantities
The company has passed the international mainstream semiconductor equipment manufacturer Tel / Lam certification; The certification of Japanese market and other semiconductor products in China is also advancing steadily. With the continuous increase of the number of certified enterprises, the company’s semiconductor orders are expected to continue to increase in large quantities, and it is expected to maintain a high growth from 21 to 23. The company adopts the continuous financing process with lower cost. We estimate that the product price is about 30% lower than that in foreign countries, with obvious competitive advantage. Benefiting from the trend of semiconductor localization, the company’s market share of semiconductor quartz materials is expected to increase rapidly. Due to the impact of the limited film, the production progress of 6000 ton electronic production line has slowed down slightly, but it is still progressing steadily. According to the company’s announcement, 6 of the 18 lines have been put into production. The company announced that the construction cycle of electronic production line will be extended to October 22, and we expect the construction progress of the company to be accelerated.
Investment suggestion: due to the company’s acquisition of Qiangbang quartz and the superposition of high-purity sand, the price has room to rise. We predict that the net profit attributable to the parent company in the year 21 / 22 / 23 will be 269 / 533 / 726 million, and raise the profit forecast (the previous value was 269 / 492 / 646 million), corresponding to 80 / 40 / 29 times of the current share price. Considering the high prosperity of the company’s semiconductor / photovoltaic business, the acceleration of production capacity and the improvement of product structure, the “overweight” rating is maintained.
Risk warning: the demand is less than expected; The launch of new capacity is less than expected; The price of raw materials has risen sharply.
