PACIFIC QUARTZ(SH:603688) Shanxi Securities·2025-10-28 07:04Investment Rating - The report maintains an investment rating of "Buy-A" for the company [1][7]. Core Insights - The company is a leading producer of high-purity quartz sand, with applications in both photovoltaic and semiconductor sectors. It has a comprehensive product range and a well-established supply chain [1][15]. - The semiconductor industry is experiencing sustained demand driven by the AI wave, with significant potential for domestic substitution. The company is one of the few that has received TEL certification for its semiconductor products, positioning it well to benefit from this trend [2][64]. - The photovoltaic sector is also showing strong growth, with the company maintaining a leading position in the market for quartz crucibles, which are essential for silicon wafer production [3][67]. Summary by Sections Company Overview - Jiangsu Pacific Quartz Co., Ltd. was established in 1992 and listed on the Shanghai Stock Exchange in 2014. The company offers a wide range of products including high-purity quartz sand, quartz tubes, and crucibles, serving various applications in semiconductors, photovoltaics, and optical fibers [1][15][16]. Semiconductor Sector - The semiconductor market is projected to grow significantly, with a forecasted market size of $700.9 billion in 2025, reflecting an 11.2% year-on-year increase. The company is well-positioned to capitalize on the domestic substitution trend due to its certifications and product quality [2][41]. - The domestic semiconductor industry has a high dependency on imports, with a trade deficit of $226.1 billion in 2024, indicating a substantial opportunity for local manufacturers [2][58]. Photovoltaic Sector - The global photovoltaic market is expected to maintain growth, with new installations projected between 466-549 GW in 2025. The company is a key player in the quartz crucible market, which is crucial for the production of silicon wafers [3][67]. - The market for photovoltaic-grade quartz crucibles is anticipated to grow, with a projected CAGR of 21.5% from 2024 to 2029, further driving demand for high-purity quartz sand [3][72]. Financial Forecast and Valuation - The company is expected to see a rebound in net profit from 2025 to 2027, with estimates of 2.2 billion yuan, 5.6 billion yuan, and 9.1 billion yuan respectively. The earnings per share (EPS) for the same period is projected to be 0.41 yuan, 1.03 yuan, and 1.68 yuan [7][8]. - The report highlights the sensitivity of the company's net profit to changes in quartz sand prices, indicating significant potential for profit growth if prices recover [7][88].