Qingdao Gaoce(688556)2025-01-17 02:53Investment Rating - The report assigns a "Buy" rating with a target price of RMB 13.00 [4][5]. Core Insights - The report highlights that the company is experiencing a continuous increase in market share for diamond wire, with a December market share reaching nearly 30% [1][2]. - Despite pressure on capacity utilization and profitability, the company expects to turn profitable in the diamond wire business by March-April 2025 [1][2]. - The silicon wafer slicing service is currently operating at a capacity utilization of 55-60%, and the business remains in a loss position due to low silicon wafer prices [3]. - The equipment segment is anticipated to incur losses in 2025 due to weak orders and ongoing R&D expenses [3]. - The company projects a revenue growth of over 20% in its innovative business segment, with ongoing horizontal expansion into high-end marble cutting markets [1]. Summary by Sections Diamond Wire Segment - In Q4 2024, the company shipped nearly 1,500 million kilometers of diamond wire, with tungsten wire accounting for 65% of shipments, compared to the industry average of over 30% [1][2]. - The company has become the largest diamond wire supplier to Zhonghuan, holding approximately 40% market share [2]. Silicon Wafer Slicing Service - The total capacity for silicon wafer slicing services is 60GW, with current utilization at 55-60% [3]. - Potential drivers for profitability recovery include rising silicon wafer prices and reduced manufacturing costs [3]. Equipment Segment - The company currently has orders worth approximately RMB 1 billion but expects losses in this segment for 2025 [3]. Financial Projections - The report provides financial forecasts, including expected revenues and profits for the upcoming years, with a projected revenue of RMB 5.072 billion for 2024 and RMB 4.298 billion for 2025 [7]. - The expected diluted earnings per share for 2025 is RMB 0.80, with a projected increase to RMB 1.20 by 2026 [7]. Market Data - The company's market capitalization is RMB 5.84 billion, with a current share price of RMB 10.69 as of January 15, 2025 [5]. - The report indicates a forecasted stock price increase of 21.6% and a dividend yield of 2.8% [9].