\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 16 Zhejiang Jingsheng Mechanical & Electrical Co.Ltd(300316) )
Event:
The company released its annual report for 2021 on April 26, 2022, realizing an operating revenue of 5.961 billion yuan, an increase of 56.44% year-on-year; Due to the significant expansion of silicon wafer production, the gross profit margin of the company’s equipment increased, and the net profit attributable to the shareholders of the listed company was 1.712 billion yuan, a year-on-year increase of 99.46%, significantly exceeding the original expected value of 1.393 billion yuan. The net cash flow from operating activities was 1.737 billion yuan, an increase of 82% year-on-year.
Comments:
Strong demand for silicon wafer equipment, coupled with inventory management, has greatly improved its profitability
In 2021, the company’s comprehensive gross profit margin was 39.73%, with a year-on-year increase of 3.12pct, and the gross profit margin returned to the high point in recent years. Driven by the accelerated expansion of silicon wafer production in 2021, the company’s Q1 to Q4 comprehensive gross profit margin increased quarter by quarter, 36.35% / 36.66% / 40.38% / 42.86% respectively. In 2021, the company’s net profit margin was 28.99%, up 6.64pct year-on-year. Benefiting from the increase of product gross profit margin and the decrease of asset and credit impairment, the company’s net profit margin increased significantly this year. At the end of 2021, the company’s inventory was 6.051 billion yuan, a significant year-on-year increase of 3.47 billion yuan, and the contract liability was 4.964 billion yuan, a significant year-on-year increase of 2.96 billion yuan. The company had full equipment orders and sufficient inventory this year.
Silicon wafer equipment continues to increase, with full orders on hand
In 2021, China’s photovoltaic industry continued to grow rapidly, downstream silicon wafer manufacturers actively promoted the production expansion progress, and large-scale silicon wafer production expansion projects were implemented one after another. In 2021, the company completed 2556 crystal growth equipment, with a year-on-year increase of 41.7%. By the end of 2021, the company has not completed the contract of crystal growth and intelligent processing equipment, totaling 20.085 billion yuan, which is 3.37 times of its operating revenue in 2021. In the future, the company will continue to maintain the leading position of silicon wafer equipment technology and scale.
Maintaining a high level of R & D expenditure, silicon carbide materials will become another growth point
In 2021, the company invested 353 million yuan in R & D, accounting for 5.93% of revenue, with a year-on-year increase of 55.65%. The R & D expense rate has been close to 6% for many consecutive years. R & D is the core of its leading long-term maintenance technology. At present, Zhejiang Jingsheng Mechanical & Electrical Co.Ltd(300316) has built a 6-inch silicon carbide crystal growth, slicing and polishing R & D experimental line, and the products have passed the verification of some downstream customers. The company’s silicon carbide materials are expected to shorten the gap at home and abroad, and directly benefit from the wide application of the third generation semiconductor in power equipment, intelligent manufacturing and other fields.
Profit forecast and investment suggestions
Zhejiang Jingsheng Mechanical & Electrical Co.Ltd(300316) is a leading enterprise of photovoltaic silicon wafer equipment. By the end of 2021, it has more than 20 billion yuan of orders on hand. High R & D investment promotes the continuous growth of silicon carbide and sapphire materials business, which is expected to create the second growth curve of the company. Due to the strong demand for components in recent years, we raised the original performance measurement. It is expected that the company’s revenue in 20222023 will be 94.4/135.0 (original value: 8.16/11.11 billion yuan) and the net profit attributable to the parent company will be 22.9/29.2 (original value: 1.39/1.89 billion yuan) respectively. At the same time, the 24-year profit forecast revenue will be 18.8 billion yuan and the net profit attributable to the parent company will be 3.96 billion yuan. EPS is 1.78/2.27/3.08 yuan / share respectively, and the corresponding PE is 27.3/21.4/15.8 times. Due to the continuous expansion of silicon wafer production and the continuous improvement of the company’s equipment revenue, we gave the company 30 times PE in 22 years, with a target price of 53.40 yuan, maintaining the rating of “overweight”.
Risk tips
The silicon wafer production capacity is relatively surplus, the competition in the equipment industry is intensified, and the silicon carbide business is less than expected
