20220428-招银国际-晶盛机电-300316.SZ-High_visibility_with_backlog_covering__80__of_revenue_in_2022E-23E_5页_1mb

Zhejiang Jingsheng (300316 CH) Summary

Core Content

Zhejiang Jingsheng (300316 CH) is a company operating in the China capital goods sector, with a focus on solar and semiconductor equipment. The company has shown strong growth in both revenue and net profit in 2021 and the first quarter of 2022, driven by increased demand for its products and services. The research report maintains a BUY rating with a target price of RMB93.00, indicating strong potential for returns over the next 12 months.

Key Financial Highlights

• Revenue Growth:

  • FY20A: RMB3,811mn
  • FY21A: RMB5,961mn (+56% YoY)
  • FY22E: RMB11,830mn (+98% YoY)
  • FY23E: RMB14,731mn (+25% YoY)
  • FY24E: RMB17,546mn (+19% YoY)

• Net Profit Growth:

  • FY20A: RMB858mn
  • FY21A: RMB1,712mn (+99% YoY)
  • FY22E: RMB2,671mn (+56% YoY)
  • FY23E: RMB3,276mn (+23% YoY)
  • FY24E: RMB3,908mn (+19% YoY)

• Earnings Per Share (EPS):

  • FY20A: RMB0.67
  • FY21A: RMB1.33
  • FY22E: RMB2.08
  • FY23E: RMB2.55
  • FY24E: RMB3.04

• P/E and P/B Ratios:

  • FY20A: P/E 65.9x, P/B 10.8x
  • FY21A: P/E 33.1x, P/B 8.3x
  • FY22E: P/E 21.2x, P/B 6.2x
  • FY23E: P/E 17.3x, P/B 4.8x
  • FY24E: P/E 14.5x, P/B 3.7x

• Key Ratios:

  • Gross margin: Increased from 36.6% in FY20A to 39.7% in FY21A, and is expected to remain stable in the future.
  • Core operating margin: Rose from 25.2% to 28.8% in FY21A.
  • ROE: Improved from 17.5% to 28.4% in FY21A, and is projected to be 33.4% in FY22E.
  • Net gearing: Remains at net cash throughout the forecast period.

Main Points and Analysis

• High Visibility and Backlog:

  • As of March 2022, the total backlog reached RMB22.2bn, covering >80% of the estimated revenue for 2022E and 2023E.
  • Solar equipment backlog: RMB20.9bn, which accounts for 94% of the total backlog.
  • Semiconductor equipment backlog: RMB1.3bn, or 6% of total backlog, with significant YoY growth.

• Growth Drivers:

  • Solar Equipment Upgrade: The company is positioned to benefit from the ongoing upgrade of solar wafer equipment to larger formats (182mm and 210mm), which is expected to drive demand for new furnaces.
  • Semiconductor Demand: The semiconductor equipment segment is experiencing robust demand, with backlog increasing by 1.4x YoY and 26% QoQ. Management is optimistic about securing future contracts for 12-inch epitaxy equipment.

• Operational Performance:

  • Net profit in 2021 grew 99% YoY, while in 1Q22 it increased 57% YoY, consistent with earnings expectations.
  • The company has maintained a payout ratio of 21%, consistent with previous years.
  • Net operating cash outflow in 1Q22 was RMB744mn, reflecting increased procurement of key components in anticipation of potential shortages.

• Market Position:

  • Equipment and service constitute 88% of revenue in FY22E and is expected to remain the dominant segment.
  • Sapphire products and other segments are expected to maintain a smaller but growing share.

• Risks:

  • Weaker-than-expected solar power capacity expansion.
  • Lower-than-expected gross margin.
  • Risk of semiconductor business expansion.

Key Information

• Target Price: RMB93.00 (unchanged from previous)

• Current Price: RMB47.30

• Market Cap: RMB60,850mn

• Shareholding Structure:

  • Invt. Mgmt. and Consulting: 48.32%
  • QIU Minxiu: 2.97%
  • CAO Jianwei: 2.77%

• Share Performance:

  • 1-month: -20.9%
  • 3-month: -18.7%
  • 6-month: -36.9%

• Forward P/E and P/B Bands:

  • P/E: Expected to decrease from 65.9x in FY20A to 14.5x in FY24E.
  • P/B: Expected to decrease from 10.8x in FY20A to 3.7x in FY24E.

Conclusion

Zhejiang Jingsheng is a company with strong growth potential in the solar and semiconductor equipment sectors. The high backlog and management confidence in continued demand support the BUY rating. While the company faces certain risks, its financial performance and market position suggest a solid outlook for future earnings and returns. Investors are advised to consult with a professional financial advisor for personalized investment decisions.