\u3000\u3 Shengda Resources Co.Ltd(000603) 185 Wuxi Shangji Automation Co.Ltd(603185) )
Event:
The company released its annual report for 2021 on April 27, 2022, realizing an operating revenue of 10.915 billion yuan, an increase of 262.51% year-on-year; The net profit attributable to shareholders of listed companies was 1.711 billion yuan, a year-on-year increase of 222.10%, and the net cash flow from operating activities was 916 million yuan, a year-on-year increase of 100965%
Comments:
The demand for components is strong, and the price of silicon material suppresses the performance
In 2021, the company’s comprehensive gross profit margin was 19.75%, a year-on-year decrease of 7.72 PCT, and the gross profit margin fell due to the rise in the price of upstream silicon materials. Subject to the quarterly rise of silicon material price in 2021, the company’s comprehensive gross profit margin from Q1 to Q4 showed a downward trend, which were 26.54% / 34.56% / 19.09% / 8.46% respectively. In 2021, the cost control ability of the company was greatly improved, and the net profit margin of this year was 15.70%, a year-on-year decrease of 1.97 PCT, which was less than the gross profit margin. In 2021, the company’s net profit deducted from non attributable assets was 1.434 billion yuan. The non recurring profit and loss of this year mainly consisted of the profit and loss from the disposal of financial assets.
The production capacity was gradually released, and the revenue and profit increased
In 2021, Wuxi Shangji Automation Co.Ltd(603185) phase III crystal drawing and slicing project was put into operation. By the end of 2021, the company has formed 30GW crystal drawing capacity of monocrystalline silicon and matched with corresponding slicing capacity. In 2021, the company’s monocrystalline silicon shipment reached 45500 tons, with a year-on-year increase of 145.62% and a high production and sales rate of 92.10%, which confirms the strong demand for downstream components and the continuous growth of the company’s monocrystalline silicon business.
Extend to the upstream silicon material and start after the equipment transformation and silicon wafer manufacturing
In 2021, Wuxi Shangji Automation Co.Ltd(603185) in order to further ensure the safety of the supply chain and actively layout the silicon business, it signed a strategic cooperation framework agreement with Jiangsu Zhongneng, and plans to jointly invest in the production project of 100000 tons of granular silicon and 150000 tons of high-purity nano silicon. In addition, the company signed an investment agreement with Baotou City in 2022 and plans to invest in the production of 150000 tons of high-purity industrial silicon and 100000 tons of high-purity crystalline silicon in Guyang County, Baotou City, Inner Mongolia. The first phase of 80000 tons of high-purity industrial silicon and 50000 tons of high-purity crystalline silicon have been under construction.
Profit forecast and investment suggestions
Wuxi Shangji Automation Co.Ltd(603185) take the equipment as the entry point to enter the silicon wafer industry. In the future, it will extend to the upstream silicon material link and continue to make efforts at the manufacturing end. On the premise of ensuring the supply of raw materials, the profitability of the company will be further guaranteed. We estimate that the company’s revenue from 2022 to 2023 will be 17.22/21.98 billion yuan (original value: 17.30/24.11 billion yuan), and the net profit attributable to the parent company will be 2.07/3.18 billion yuan (original value: 3.02/4.31 billion yuan). Meanwhile, we increase the 24-year profit forecast revenue to 23.07 billion yuan, the net profit attributable to the parent company will be 3.93 billion yuan, and the EPS will be 7.52/11.54/14.28 yuan / share, corresponding to 15.6/10.2/8.2 times of PE. Due to the large growth space of the company’s silicon material business, we give the company 20 times PE in 22 years, and the target price is 150.4 yuan, maintaining the “buy” rating.
Risk tips
The price of silicon material fell, the capacity of silicon wafer was released too fast, and the company’s existing technology was replaced
