\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 16 Zhejiang Jingsheng Mechanical & Electrical Co.Ltd(300316) )
Event: on April 12, 2022, the company issued 2022q1 performance forecast.
Key investment points
The Q1 performance forecast is in line with the expectation and less affected by the epidemic. The annual performance has increased significantly: the performance forecast predicts that Zhejiang Jingsheng Mechanical & Electrical Co.Ltd(300316) 2022q1 will realize a net profit attributable to the parent company of RMB 400480 million, with a year-on-year increase of 42% – 71%; The net profit deducted from non parent company was 390470 million yuan, with a year-on-year increase of 61% – 94%. The first quarter is the off-season for the acceptance of photovoltaic equipment enterprises (according to the historical data of the past three years, the net profit attributable to the parent company of Q1 accounts for 16% – 20% of the whole year). We expect that sufficient orders and high profitability will promote the rapid growth of the company’s annual performance (the company is less affected by the epidemic, and has explored the supply mechanism under the epidemic with suppliers and customers in the past 2-3 years).
The number of newly signed orders increased sharply in 2021. The order in 2022 depends on overseas production expansion and silicon material price: photovoltaic is an industry with extreme PK cost. Customers generally choose the best equipment to help them reduce costs and increase efficiency, resulting in a high market share of equipment leaders. By the end of 2021q3, the company’s orders on hand were 17.76 billion yuan; In October and November of 2021, we signed contracts with Qinghai Gaojing and Shuangliang respectively, with a total amount of 3.099 billion yuan (including tax). The total amount of the above orders on hand reached 20.9 billion yuan (corresponding to 18.5 billion yuan of tax-free income, which will be confirmed after 2021q3). We expect that the newly signed orders in Zhejiang Jingsheng Mechanical & Electrical Co.Ltd(300316) 2021 will exceed 20 billion yuan.
We believe that whether new orders continue to grow year-on-year in 2022 depends on the landing of the overseas market. At the same time, we should dynamically observe the capacity catch-up speed of the second and third tier silicon wafer plants and the strategy of the first tier silicon wafer plants to continue to expand production. With the recovery of downstream installed capacity after the decline of silicon material price, we expect that the expansion of production in 2022 is expected to be the same as that in 2021 (150gw).
The profitability is continuously improved, and the leader of long crystal equipment releases high performance elasticity: the profitability is continuously improved under the scale effect. The scale effect of photovoltaic equipment is significant. The net interest rate of Zhejiang Jingsheng Mechanical & Electrical Co.Ltd(300316) 2021q3 exceeds 30%. With leading management ability, the net interest rate is expected to be further improved. Capacity release corresponds to high performance elasticity. In the past two years, the company has been improving lean manufacturing & optimizing the supply chain, which can quickly digest the orders on hand, release the production capacity and transform it into performance flexibility.
Profit forecast and investment rating: photovoltaic equipment is the first curve of Zhejiang Jingsheng Mechanical & Electrical Co.Ltd(300316) , the second curve is the volume of semiconductor large silicon wafer equipment, and the third curve is the full volume of sapphire material and silicon carbide material. We maintained the company’s net profit attributable to the parent company from 2021 to 2023 at rmb1718 / 2492 / 3.506 billion, corresponding to 39 / 27 / 19 times of dynamic PE, and maintained the “buy” rating.
Risk tip: the downstream expansion progress of photovoltaic is lower than the market expectation, and the expansion of new products is lower than the market expectation.
