\u3000\u3 Guocheng Mining Co.Ltd(000688) 556 Qingdao Gaoce Technology Co.Ltd(688556) )
Event: the company released its 2021 annual report and 22q1 quarterly report. In 21 years, the company achieved an operating revenue of 1.567 billion yuan, a year-on-year increase of + 109.97%; The net profit attributable to the parent company was 173 million yuan, a year-on-year increase of + 193.38%; The net profit of non profit was 30.2 billion yuan, or 87.1% year-on-year. In a single quarter, Q4 achieved a revenue of 594 million yuan, a year-on-year increase of + 148.26%; The net profit attributable to the parent company was 61 million yuan, a year-on-year increase of 228.22%.
According to the 22q1 quarterly report, the company achieved a revenue of 556 million yuan in the first quarter, a year-on-year increase of + 103.06%; The net profit attributable to the parent company was 97 million yuan, a year-on-year increase of + 173.27%; The net profit deducted from non parent company was 97 million yuan, a year-on-year increase of + 244.19%. The performance greatly exceeded the market expectation, which was due to 1) the supply of diamond wire was in short supply, the production capacity and shipment volume of the company increased significantly after the completion of technical transformation, 2) the price of silicon wafer was at a high level, and the profitability of silicon wafer and cutting and processing services was good.
Focus on high-quality production and sales, cutting equipment / consumables supply, and the production and sales volume is leading in the industry. The company is a leading supplier of cutting equipment and cutting consumables for high hard and brittle materials in China. At present, it has a systematic cutting solution of “cutting equipment, cutting consumables and cutting technology” in the photovoltaic field. Photovoltaic cutting equipment: in 21 years, the total revenue was 980 million yuan, a year-on-year increase of + 116.95%; As of December 31, 2021, the total amount of orders on hand was 847 million yuan (including tax), a year-on-year increase of + 132.40%. Customers were all over Longji, Jingao, Jingke, Gaojing, Tonghe, Anhui Huasheng, etc; Photovoltaic cutting consumables (diamond wire): in 2021, the company achieved an operating revenue of 292 million yuan, a year-on-year increase of + 37.47%; In the past 21 years, the annual output of Vajra line reached 10 million kilometers, a year-on-year increase of + 115.29%, the annual sales volume exceeded 8 million kilometers, a year-on-year increase of + 80.54%, and the market share was about 12%. By Q1 2022, the company has completed the technical transformation activities of “one machine and twelve lines” of all existing diamond line production lines. The overall effective annual production capacity of diamond line can reach more than 25 million kilometers. If the full production and sales throughout the year are considered, the market share of the company’s diamond line business is expected to exceed 20%.
Continue research and development to promote industrial upgrading, and the market share of slicing capacity is expected to increase. In terms of R & D, the company incurred R & D expenses of about 117 million yuan in 21 years, with a year-on-year increase of 336.32%; 73 new patents were added this year, and 381 patents were obtained in total. Adhering to the concept of technological innovation and value creation, focusing on the technical trend of “large size, thin sheet, thin line, high line speed, automation and intelligence” of photovoltaic silicon wafer, the company first launched hjt special 120 in 21 years μ M thick silicon wafers, leading the technological innovation of the industry, and cooperating with Jiangsu Akcome Science And Technology Co.Ltd(002610) and other companies to continuously promote the thickness of silicon wafers from 150 μ M to 120 μ m、90 μ Cost reduction path of M. Slicing: the company has mastered the know-how of cutting equipment and consumables, and the slicing rate and yield are higher than the average level of the market. At present, the company has cooperated with Tongwei Co.Ltd(600438) , Meike Cecep Solar Energy Co.Ltd(000591) , Beijing Jingyuntong Technology Co.Ltd(601908) , sunshine energy, runyangguangfu and other companies in slicing business. The project of Leshan silicon wafer research and development base and intelligent manufacturing demonstration factory in 21 years will be fully put into production in 21q4, with a production capacity of 5GW; It is estimated that the company’s silicon wafer cutting and processing capacity will reach 21gw by the end of 2022. Considering the ramp up of capacity, it is estimated that the effective capacity of slicing business will exceed 10GW in 2022, which will be greatly increased.
Investment suggestion: we expect the company to achieve revenue of RMB 3.151/4.067/5.056 billion from 2022 to 2024, and the net profit attributable to the parent company will be RMB 471/6.27/767 million respectively, with growth rates of 173% / 33% / 22% respectively. On April 28, the share price corresponds to PE multiples of 21x / 16x / 13X. The company is a leading enterprise in photovoltaic cutting equipment and consumables. The slicing business and other growth curves dance together and maintain the “recommended” rating.
Risk warning: downstream demand is less than expected; Intensified market competition; Business expansion was less than expected.
