Jingsheng Mechanical and Electrical Review: performance exceeding expectations and abundant orders; looking forward to a breakthrough in semiconductor equipment and silicon carbide [agency review]

Announcement 2021 performance Forecast: the performance exceeded expectations, with an increase of 84% over the same period last year. 114%; it is estimated that the order on hand is nearly 20 billion.

1) return net profit: it is expected to be RMB15.8 to 1.84 billion in 2021, an increase of 84% RMB114% compared with the same period last year. If you look at the Q4 quarter of 2021 alone, the net profit is expected to be 4.7-730 million yuan, an increase of 41% Murray 119% over the same period last year, and a month-on-month change of-8% to 43% compared with Q3.

2) deducting non-return net profit: it is expected to be 1.51 billion yuan to 1.77 billion yuan in 2021, an increase of 85% over the same period last year. 116%. In the Q4 quarter of 2021 alone, the deduction of non-net profit is expected to be 4.6-720 million yuan, an increase of 40% to 119% compared with the same period last year, and 42% compared with Q3-9%.

3) non-recurrent profit and loss: it is estimated to be about 70 million yuan in 2021, which is mainly judged to be government subsidy.

4) on-hand orders: as of Q3 in 2021, the company's orders-on-hand were 17.76 billion yuan (up 201% year-on-year, mainly for photovoltaic equipment), of which semiconductor equipment orders were 726 million yuan (up 77% from the same period last year). The company signed another 2.32 billion orders with Gao Jing and Shuangliang from October to November, and is expected to have nearly 20 billion orders on hand.

Short-term: benefiting from the surge of production expansion in the photovoltaic silicon wafer industry, the company's performance exceeded expectations. The company occupies an absolute leading position in the non-Longji market, with on-hand orders expected to be nearly 20 billion by the end of 2021, providing a strong guarantee for the company's performance in 2022-2023.

Medium-and long-term: the company's semiconductor equipment is progressing smoothly and is expected to relay photovoltaic equipment in the next 2-3 years. At the same time, the company's strategy from "equipment to materials" layout, the market space is no less than equipment, sapphire + silicon carbide business is expected to open the company's performance growth second curve.

Plan to increase silicon carbide materials and semiconductor equipment in 5.7 billion, and move towards semiconductor equipment + material leader.

1) Silicon carbide substrate wafer production base project: it is planned to build an annual production capacity of more than 400000 pieces of conductive and insulated silicon carbide substrates in Yinchuan, Ningxia. The company is setting up a pilot production line from raw material synthesis > crystal growth > cutting, grinding and polishing, and has successfully grown 6-inch conductive silicon carbide crystals, whose main properties meet the requirements of industrial-grade wafers in the industry, and are under third-party testing and downstream epitaxial verification. The global market of silicon carbide substrates is 10 billion, which is mainly occupied by Wolfspeed, II-VI, ROHM and other companies. On December 3rd, the company's annual output of 400000 silicon carbide semiconductor materials project has been successfully signed in Yinchuan, looking forward to another breakthrough in business.

2) Semiconductor large wafer equipment test line project: the pilot test line of 12-inch semiconductor large wafer equipment is planned. It will help customers to carry out testing and verification of semiconductor equipment and processes, build a good customer relationship, and strengthen the first-mover advantage of the company's industrial chain.

3) Annual production of 80 sets of semiconductor material polishing and thinning equipment manufacturing project: it is planned to build 35 sets of semiconductor material thinning equipment and 45 sets of semiconductor material polishing equipment in Shaoxing, Zhejiang Province. to further improve the company's industrial supporting capacity in the field of semiconductor wafer equipment. At present, Central leading, Shanghai Silicon Industry, Lion Micro, Yiswei and Sheng Gong Co., Ltd. have all expanded production capacity in 8-inch or 12-inch silicon wafer projects, leading to the expansion of demand for thinning and polishing equipment, and there is a broad space for domestic substitution.

Investment advice: the company is optimistic about the performance of the relay in the fields of photovoltaic, semiconductor, sapphire and silicon carbide in the next 5 years.

The company's net profit from 2021 to 2023 will be raised to 17.1 RMB 24.5 / 3.41 billion, an increase of 99%, 44% and 39% over the same period last year, corresponding to the PE of 45-31-22. Maintain a "buy" rating.

Risk tips: semiconductor equipment research and development progress is lower than expected; photovoltaic downstream expansion is not as expected.