ZHEJIANG JINGSHENG(300316)：1Q23E PROFIT BEAT EXPECTATIONS; MULTIPLE CATALYSTS AHEAD

　　Zhejiang Jingsheng （JSG） preannounced over the weekend that net profit in 1Q23 is expected to surge 81-103% YoY to RMB800-900mn, which is better than expectation. We believe this was likely driven by strong growth of crucibles revenue and margin, as well as faster-than-expected equipment delivery. We revise up our earnings forecast in 2023E/24E/25E by 11%/10%/7%. We revise up our TP to RMB106, based on 32x 2023E P/E, on the back of 32% earnings CAGR in 2023E-24E. Reiterate BUY. Upcoming catalysts include: （1） the launch of the 5th generation crystal growing furnace in 2Q23E; （2） new orders on solar cell & module equipment; and （3） spin-off of crucible business unit.
　　5th generation crystal growing furnace to be launched. JSG recently　completed the R&D of the 5th generation furnace. According to JSG, the new generation furnace will allow the customers to develop their own software systems so as to offer differentiated products. We expect JSG to announce the new product in May.
　　TCL Zhonghuan’s latest expansion plan positive to JSG. TCL　Zhonghuan （002129 CH, NR） announced last week that it plans to raise RMB13.8bn through the issuance of CB to finance two capacity expansion plans （total capex RMB14.3bn）。 First, Zhonghuan plans to spend RMB3.65bn on a smart factory with annual wafer capacity of 35GW. We expect JSG will win the majority of equipment orders. Second, Zhonghuan will spend RMB10.7bn to build a smart factory for TOPCon solar cell （annual capacity: 25GW）。 Given the long-standing cooperation between Zhonghuan and JSG, we see chance for JSG to start winning orders for solar cell equipment.
　　Spin-off of crucible business. JSG announced last week that it plans to spin off Meijing New Materials （美晶新材料） for separate listing. Meijing is the subsidiary of JSG, which is mainly engaged in the production and sales of crucibles for both solar power and semiconductor sector. The monthly production capacity of crucibles is expected to increase from 15k units as of end-2022 to >20k units in 3Q23E. JSG currently owns 57.8% of Meijing.　OJing Science & Technology （001269 CH, NR）， major peer of Meijing, is　currently trading at 27x 2023E P/E （Bloomberg consensus）。
　　We revise up our net profit forecast in 2023E/24E/25E by 11%/10%/7%　to reflect （1） 21%/19%/16% increase in revenue, driven by higher growth assumption on materials and faster equipment delivery; （2） higher gross margin due to price hike of crucibles. Our net profit revision is less than that of the revenue as our MI assumption is higher （JSG owns 57.8% of crucible business）。
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   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。