\u3000\u3000 Zhejiang Jingsheng Mechanical & Electrical Co.Ltd(300316) (300316)
Key investment points
Announcement of 2021 performance forecast: the performance exceeded expectations, with a year-on-year increase of 84% – 114%; It is estimated that the orders on hand are nearly 20 billion
1) net profit attributable to parent company: it is expected to be RMB 1.58-1.84 billion in 2021, with a year-on-year increase of 84% – 114%. Looking at Q4 of 2021 alone, the net profit attributable to the parent company is expected to be 470-730 million yuan, with a year-on-year increase of 41% – 119% and a month on month change of – 8% to 43%.
2) net profit attributable to parent company after non deduction: it is expected to be RMB 1.51 billion to RMB 1.77 billion in 2021, with a year-on-year increase of 85% – 116%. Looking at the Q4 quarter of 2021 alone, the net profit after deduction is expected to be 460-720 million yuan, an increase of 40% to 119% year-on-year and q3-9% – 42% month on month.
3) non recurring profit and loss: it is estimated that it will be about 70 million yuan in 2021, which is judged to be mainly government subsidies.
4) orders on hand: as of Q3 in 2021, the company’s orders on hand were 17.76 billion yuan (a year-on-year increase of 201%, mainly photovoltaic equipment orders), including 726 million yuan of semiconductor equipment orders (a year-on-year increase of 77%). From October to November, the company signed another 2.32 billion orders with Gaojing and Shuangliang, and the orders in hand are expected to be nearly 20 billion.
Short term: benefiting from the significant expansion of photovoltaic silicon wafer industry, the company’s performance exceeded expectations. The company occupies an absolute leading position in the non Longji market. By the end of 2021, the orders on hand are expected to be nearly 20 billion, providing a strong guarantee for the company’s performance from 2022 to 2023.
Medium and long term: the company’s semiconductor equipment is progressing smoothly and is expected to relay large-scale photovoltaic equipment in the next 2-3 years. At the same time, the company’s strategy is “equipment to materials”, and the market space is no less than equipment. The sapphire + silicon carbide business is expected to open the second curve of the company’s performance growth.
It is planned to increase silicon carbide materials and semiconductor equipment by RMB 5.7 billion to become the leader of semiconductor equipment + materials
1) silicon carbide substrate wafer production base project: it is planned to build an annual production capacity of 400000 conductive + insulating silicon carbide substrates with an annual output of more than 6 inches in Yinchuan, Ningxia. The company is setting up a pilot production line from raw material synthesis > crystal growth > cutting, grinding and polishing. It has successfully grown 6-inch conductive silicon carbide crystals, whose main properties meet the requirements of industrial grade wafers in the industry, and is being tested by the third party and verified by downstream epitaxy. The global 10 billion market of silicon carbide substrate is mainly occupied by wolfspeed, II-VI, Rohm and other companies, and there is a wide space for domestic substitution. On December 3, the company’s annual output of 400000 silicon carbide semiconductor materials project has been successfully signed in Yinchuan, looking forward to further business breakthrough.
2) semiconductor large silicon wafer equipment test line project: it is planned to build a 12 inch semiconductor large silicon wafer equipment pilot line. It will help to test and verify semiconductor equipment and processes for customers, build a good customer relationship, and strengthen the first mover advantage of supporting the company’s industrial chain.
3) production and manufacturing project with an annual output of 80 sets of semiconductor material polishing and thinning equipment: it is planned to build an annual output of 35 sets of semiconductor material thinning equipment and 45 sets of semiconductor material polishing equipment in Shaoxing, Zhejiang, so as to further improve the company’s industrialization supporting capacity in the field of semiconductor wafer equipment. At present, Zhonghuan leading, National Silicon Industry Group Co.Ltd(688126) , Hangzhou Lion Electronics Co.Ltd(605358) , yisiwei, Thinkon Semiconductor Jinzhou Corp(688233) etc. are all expanding production capacity in 8-inch or 12 inch silicon wafer projects, driving the expansion of demand for thinning and polishing equipment, and there is a wide space for domestic substitution.
Investment suggestion: optimistic about the company’s performance in the fields of photovoltaic, semiconductor, sapphire and silicon carbide in the next five years
The net profit attributable to the parent company from 2021 to 2023 was increased to RMB 1.71/24.5/3.41 billion, with a year-on-year increase of 99% / 44% / 39%, corresponding to 45 / 31 / 22 times of PE. Maintain the “buy” rating.
Risk tip: the R & D Progress of semiconductor equipment is lower than expected; The downstream expansion of photovoltaic production was less than expected.
