招银国际-捷佳伟创-300724-Weakness in 2Q profit one-off in nature; Focus on TOPCon & Perovskite solar cel

　　捷佳伟创(300724)
　　S.C’s revenue/net profit in 2Q22 dropped 9%/5% YoY to RMB235mn but largelydue to the delay of certain product delivery as a result of Covid-related lock-downmeasures, which are one-off in nature. We expect S.C’s growth story to remainsolid, on the back of strong order intakes on both TOPCon (Tunnel oxidepassivated contact) and Perovskite solar cell (钙钛矿) equipment. We expectearnings growth to accelerate starting from 2H22E. We roll over our valuationbase to FY23E and fine-tuned our TP to RMB178, based on 50x P/E derived by1SD above the historical average of 36x to reflect the breakthroughs in the newequipment. Maintain BUY.
　　1H22 results affected by lock down measures but largely expected.Revenue in 1H22 grew only 2% YoY to RMB2.68bn, due to slow productdelivery as S.C’s clients are located mainly in Yangtze River Delta thataffected by lock-down measures. Net profit grew 11% YoY in 1H22, as S.Crecognized ~RMB74mn of net FX gain (S.C held some assets in US$). In2Q22, revenue dropped 9% YoY to RMB1.3bn while gross margin narrowed3.3ppt QoQ but slightly expanded 0.2ppt to 23.8%. Net profit in 2Q22 droppedonly 5% YoY (helped by ~RMB82mn net fx gain).
　　PE-poly route TOPCon and Perovskite production equipment gainingtraction. In July, S.C successively won two large-scale orders of 3-in-1 PEpoly route TOPCon equipment from global leading solar enterprises, whichindicates PE-Poly route has been gaining client recognition. Key advantagesof PE-Poly route include better solar cell efficiency, higher productionefficiency and yield, which can accelerate the mass scale production ofTOPCon solar cell. We expect a fast penetration of PE-poly route equipmentin the near term. Besides, S.C received its first contract of Perovskite solarcell coating equipment (RPD) in July.
　　Rapid expansion of TOPCon solar cell capacity. Based on the capacityexpansion plan of 15 major solar cell manufacturers, we calculate that thecumulative capacity of TOPCon to reach 64GW/93GW in 2022E/23E. Webelieve S.C remains a key beneficiary in this capex cycle.
　　Risk: 1) Weaker-than-expected downstream capacity expansion; and 2) solarcell technology transformation risk.