\u3000\u3 Guocheng Mining Co.Ltd(000688) 233 Thinkon Semiconductor Jinzhou Corp(688233) )
The company released the event description 2021 annual report. The annual operating revenue was 474 million yuan, a year-on-year increase of 146.69%, and the net profit attributable to the parent company was 218 million yuan, a year-on-year increase of 117.84%.
Core view
The global leading position of monocrystalline silicon materials is stable, the sales volume of large-diameter products has increased rapidly, and the profit structure has been optimized. According to the disclosure of the annual report, the production and sales volume of monocrystalline silicon material products of the company increased significantly in 2021. The sales volume of products below 15 inches, 15-16 inches and above 16 inches increased by 55.00%, 173.46% and 206.33% respectively, and the gross profit margin was 59.97%, 63.22% and 75.82% respectively. The company’s sales volume of large-diameter products over 16 inches has increased significantly. At the same time, benefiting from the higher gross profit margin of larger products, the company’s profitability has been further improved and the profit structure has been optimized. We believe that with the increasing size of wafers, the size of upstream materials used to produce wafers and silicon electrodes will also show a trend of large diameter. As the leading enterprise of monocrystalline silicon materials in the world, the company is expected to continue to benefit from this and continue to improve its global share.
From crystal growth to the integration of silicon electrode products, the company’s production capacity and technology remain the national leader. In 2021, the company made great breakthroughs in extending from silicon materials to silicon electrodes downstream, and achieved good results in terms of production capacity, technology and customers. The company has cooperated with Advanced Micro-Fabrication Equipment Inc.China(688012) and Naura Technology Group Co.Ltd(002371) to supply silicon electrodes for the original etching equipment; At the same time, the company’s silicon electrode has many specifications and excellent process, so it has further obtained the opportunity of sample delivery and evaluation from many 12 inch wafer factories in China, and obtained small batch orders. We believe that the domestic substitution of silicon electrodes will bring opportunities for short-term rapid development to the company. With the rapid expansion of local wafer factories and the rapid improvement of the localization rate of etching equipment, domestic silicon electrodes will usher in greater demand growth. As the only silicon electrode manufacturer in China with the integration of crystal growth and finished products, the company will fully benefit from the development of the industry and the acceleration of domestic substitution.
The sample delivery certification of semiconductor large silicon wafer is accelerated, and the light doping and low defect process is directly benchmarked with the mainstream large manufacturers. In the second half of 2021, the company made a new breakthrough in large silicon wafers and began to send samples to some large wafer factories for certification. The 8-inch lightly doped low defect silicon wafers expanded by the company through the IPO raised investment project have achieved a production capacity of 50000 wafers per month, and ordered 100000 pieces of production equipment per month in advance. According to the current verification progress, the company is expected to achieve a further breakthrough in wafer factory certification in 2022, and the mass production and sales of silicon wafers are expected to accelerate. At the same time, thanks to the rich Semiconductor R & D and production experience of the company’s management and R & D team, the company’s lightly doped low defect silicon wafers have strong competitive advantages in process and yield, which has also laid a solid foundation for the company to continue to explore 12 inch lightly doped wafers.
Profit forecast
Maintain the “buy” rating. We estimate that the net profit of the company from 2022 to 2024 will be 310 million yuan, 403 million yuan and 516 million yuan respectively, and the corresponding EPS will be 194 million yuan, 252 million yuan and 322 million yuan respectively. The current share price corresponds to the PE value from 2022 to 2024, which are 38.64, 29.77 and 23.27 times respectively. We are optimistic that the company’s traditional monocrystalline silicon materials will continue to increase their share due to large diameter. Based on the technical advantages of the material end and the rapid layout of downstream localization, silicon electrodes will bring incremental contributions. After breaking through the downstream verification through technical reserves, we will speed up the domestic substitution of silicon wafers, so as to achieve faster and higher growth in revenue and profit end.
Risk tips
The company’s performance, semiconductor industry, product export and promotion of raised investment projects were lower than expected.
