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Leading enterprise in wafer processing equipment, strong growth in photovoltaic parity background

Westdollar.com February 11, 2019 00:00 Essence Securities Li Zhe, Wang Shuwei View original PDF

CNC on the machine (603185)

The leading domestic manufacturer of high-hard and brittle materials special processing equipment, covering a complete set of equipment for wafer processing. The company is mainly engaged in the precision machine tool business. The products are divided into two categories: high-hard brittle material special processing equipment and general grinder equipment. The special processing equipment for high-hard and brittle materials covers core processing steps such as cutting, cutting, grinding, spheronization, chamfering and slicing of high-hard and brittle materials, mainly used in photovoltaic, sapphire and other fields. In terms of photovoltaics, the company has the full range of equipment from silicon ingots to wafer processing. In the first half of 2018, the company's PV special equipment accounted for 90.04% of the total revenue, of which the revenue of the PV slicer accounted for 84.35% of the total revenue. The company has established long-term and stable cooperative relations with major domestic PV and sapphire manufacturers such as GCL Group, Artes, Jingke Energy and Orient, and laid a solid foundation for the company's sustainable development. In addition, the company's products also include general-purpose grinding machine equipment, which is widely used in the machining of automobiles, aviation, ships, home appliances, metallurgy, molds and other industries.

It is the first to enter the field of wafer cutting of polycrystalline silicon wafers, and it is expected to replace mortar line cutting in the future. Compared with traditional mortar wire cutting, diamond wire slice has the advantages of thinning cutting, reducing notch loss, reducing silicon material loss, improving processing efficiency and filming rate, reducing sewage and COD emission, etc., which can greatly reduce the cost of wafer production enterprises. Improve the quality of silicon wafers. The company is one of the earliest manufacturers of diamond wire slicer in China. The main performance indicators of technology and products are close to the advanced level in foreign countries. The diamond wire slicer has gradually become the mainstream in the field of single crystal silicon cutting. According to the prediction of the International Semiconductor Equipment Materials Industry Association, the diamond wire slice in the next decade is expected to gradually replace the mortar slice in the field of polysilicon chips. At present, the company has cooperated with downstream polysilicon wafer manufacturers to take the lead in the field of wafers of silicon wafers.

The fundraising project will alleviate the capacity bottleneck and enhance the company's competitive strength. The company's high-hard and brittle materials special equipment has an annual production capacity of 200 units. In 2017 and the first half of 2018, the company's high-hard and brittle materials special equipment capacity utilization rate reached 128% and 125% respectively. According to the company's prospectus, the company plans to use the raised funds of 416 million yuan for the precision CNC machine tool production line expansion project. After the project is put into production, it will form an annual production capacity of 570 sets of high-hard and brittle materials special processing equipment and 500 sets of general-purpose grinding machines to alleviate the bottleneck of production capacity, better meet the growing market demand and consolidate the company's market competitiveness and status.

The trend of the Internet is the trend of the photovoltaic industry, and the company is expected to benefit in depth. On January 9, 2019, the National Development and Reform Commission and the Energy Bureau issued the "Notice on Actively Promoting Non-subsidized Internet Access for Wind Power and Photovoltaic Power Generation", which is expected to drive demand for downstream PV installations. According to the statistics of China Photovoltaic Industry Association, the price of PV module system has dropped by 90% in 2007-2017. At present, the production cost of PV modules in China has dropped to 2 yuan/W, and the price of PV will be available online, which will support the long-term health of PV industry. Development, the company is expected to benefit from its deep customer base.

Investment suggestion: The company is the leading manufacturer of high-hard and brittle materials processing equipment in China. It is the first to enter the multi-wafer diamond wire cutting field and ease the production bottleneck through fundraising projects. It is expected to continue to benefit from the trend of PV parity. We expect the company's net profit from 2018 to 2020 to be 2.92, 4.02, and 515 million yuan, respectively, corresponding to EPS of 2.32, 3.19, and 4.08 yuan. For the first time, the investment rating of Buy-A is given, and the 6-month target price is 65.88 yuan.

Risk warning: downstream demand fluctuations, related policy changes

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CNC basic data
  • Total share capital of 126 million shares
  • Circulating shares of 0.32 billion shares
  • Earnings per share 1.37 yuan
  • Undistributed profit per share 3.37 yuan
  • Net assets per share 12.02 yuan
  • Return on net assets 0.00%
  • Net profit 173.1153 million
  • Net profit growth rate 90.97%
Shangji CNC Investment Rating
Overall rating within one month
Overall rating in March
Statistical period Buy Overweight neutral Reduction Sell total
Within one month110002
Within three months110002
Within six months110002
Within a year110002
On-machine numerical control profit forecast
                                index 2017A 2018E 2019E 2020E
Earnings per share (yuan) 1.50 2.39 3.25 4.15
Net profit (100 million yuan) 1.89 3.01 4.09 5.23
name Quote change Number of research reports Institutional investment rating (nearly six months)
Buy Overweight neutral Reduction Sell
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