20210120-招银国际-迈为股份-300751.SZ-Key_takeaways_from_plant_visit_6页_1mb

Summary of Suzhou Maxwell Technologies (300751 CH) Company Update

Core Content

Suzhou Maxwell Technologies (300751 CH) is a leading manufacturer of screen printing equipment for solar cells, with a dominant market share of over 70%. The company has been expanding its product offerings to include HJT (Heterojunction) cell production equipment, OLED production equipment, and laser equipment. The firm has made significant progress in developing HJT technology and has secured major contracts with key players in the solar cell industry.

Key Takeaways

• Encouraging progress on HJT development: Maxwell has successfully delivered HJT screen printing equipment and is now able to offer complete production lines for HJT cells through partnerships with Jiangsu Qiweixing and Y.A.C.
• Solid backlog for earnings growth: The company has secured a large portion of the HJT cell equipment procurement tender, with 61% of the 1.85GW capacity. This backlog is expected to drive earnings growth in FY21E and beyond.
• Strong pricing power: Maxwell maintains a stable gross profit margin (34.6% in 9M20) due to its reduced competition and strong technological advantages.

Company Background

• Founded in 2010.
• Specializes in screen printing equipment for solar cells.
• Revenue has grown significantly, with a CAGR of 122% and 368% in revenue and net profit respectively from FY14 to FY19.
• Generates 70-80% of its revenue from screen printing equipment sets.

Competitive Strength in HJT Equipment

• Increasing throughput: The throughput of PECVD equipment for HJT cells increased from 5,000 pcs/hr in 2019 to 8,000 pcs/hr in 2020, and is expected to reach 10,000 pcs/hr in 2021.
• Reducing CAPEX: Per GW CAPEX for a complete HJT production line decreased from under RMB 600mn in 2019 to under RMB 500mn in 2020, with further reductions expected in 2021.
• Silver paste consumption reduction: Maxwell is introducing silver-coated copper particles and proprietary welding machines to reduce silver usage, aiming to bring HJT silver consumption in line with PERC.
• Software service: The company provides a proprietary software system to track wafer data throughout the production line, improving efficiency and enhancing client loyalty.

Revenue and Earnings Highlights

• Revenue: RMB 476mn in FY17A, RMB 788mn in FY18A, and RMB 1,438mn in FY19A, showing consistent YoY growth of 38%, 66%, and 82% respectively.
• Net income: RMB 131mn in FY17A, RMB 171mn in FY18A, and RMB 248mn in FY19A, with a YoY growth of 2%, 15%, and 24% respectively.
• P/E and P/B ratios: The stock is currently trading at 52x FY21E P/E, close to its recent historical high. P/B ratio is 15.9x (FY20E) and 12.5x (FY21E).

Market Position and Orders

• Order intakes in FY20E: Equivalent to 100GW-120GW of solar cell equipment demand, driven by replacement needs due to the shift to larger wafer formats.
• Production capacity: Fully filled till Jul-Aug 2021.
• Delivery schedule: Equipment will be delivered to Huasheng, CSIQ, and Tongwei in the mid-year of 2021. Efficiency data for Huasheng is expected in May-Jun 2021, and for Tongwei by end of 2021.

Valuation and Peer Comparison

• Valuation: The stock is currently trading at 52x FY21E P/E, similar to peers' average.
• Peer comparison (China): Maxwell's P/E (FY20E: 72.3x, FY21E: 52.4x) and P/B (FY20E: 15.9x, FY21E: 12.5x) are in line with industry averages.
• Peer comparison (Global): Global peers like Meyer Burger and Manz show varying valuations, but Maxwell's performance is competitive within the sector.

Analyst Ratings

• CMBIS Rating: NOT RATED
• Potential growth: Consensus projects earnings growth of 38% in FY21E and 37% in FY22E, which the company believes is achievable.

Shareholding and Performance

• Shareholding structure:
  • ZHOU Jian: 20.3%
  • WANG Zhenggen: 15.7%
  • Wujiang Dongyun Venture Capital: 6.7%
• Share performance:
  • 1-mth: -12.80%
  • 3-mth: +39.0%
  • 6-mth: +87.5%
• 12-mth price performance: Strong gains, with the stock increasing by 381% in 2020.

Key Projects and Milestones

• Figure 3: Highlights key milestones in HJT equipment development, including the first delivery of HJT screen printing equipment in 1H19 and the approval of related-party transactions in Oct-20 to provide complete HJT production lines.

Investment Considerations

• Northbound accumulation: Northbound investors have been accumulating Maxwell shares since Dec 2020, likely due to its growth potential in HJT technologies.
• Risk disclosure: The report includes standard disclaimers and risk warnings, emphasizing that past performance does not guarantee future results and that investment decisions should be made independently.

Conclusion

Suzhou Maxwell Technologies is a key player in the solar cell equipment market, with strong growth in screen printing equipment and a strategic expansion into HJT technology. The company's solid backlog, technological advantages, and pricing power position it well for continued earnings growth. However, the stock currently trades at a high valuation, and investors should be cautious and consider the risks associated with the sector and the company's future performance.