Affected by reduced revenue from quartz crucibles, OJing's revenue has decreased.
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As 2024 unfolds, the first listed company of quartz crucibles, Inner Mongolia OJing Technology (001269:SZ), has not escaped the fate of industry-wide production cuts. As a crucial part of the photovoltaic industry, OJing Technology primarily engages in the production of quartz crucible products, silicon material cleaning services, and cutting fluid treatment services.
OJing Technology's latest quarterly report reveals a revenue of 339 million yuan, a 46.56% year-on-year decrease, with a net profit attributable to the shareholders of the listed company at CNY 21.6758 million, marking an 87.41% decline.
OJing Technology's Vice General Manager, Director, and CFO, Ma Lei, admitted, "The decrease in revenue is mainly due to the reduction in income from quartz crucibles." Based on the purity requirements of monocrystalline silicon wafers, quartz crucibles are discarded after one or several heating and crystal pulling processes, necessitating the purchase of new crucibles for subsequent crystal pulling, making them consumables in the monocrystalline silicon industry chain. Currently, domestic quartz crucibles possess a certain cost advantage, with the quality and performance gap compared to imported ones gradually narrowing.
Apart from industry influences, the rapid decline in revenue may also be related to its severe dependence on a single customer. Its 2023 annual report indicates that OJing Technology's largest customer's sales accounted for 93.28% of its annual sales revenue; the top five customers contributed to over 98% of the annual sales revenue, a situation comparable to its initial public offering. Its prospectus revealed that in the first six months of 2020, OJing Technology's largest customer, TZE, accounted for 90.60% of its revenue. In the first quarter of 2024, TZE's operating income decreased by 43.62% year-on-year, and the decline in sales to major downstream customers may impact OJing Technology's performance trend.
During the 2023 annual performance meeting held on May 8, in response to related queries, OJing Technology's Vice General Manager and Secretary of the Board of Directors, Liu Min, stated, "Silicon wafer producer TZE and LONGi have a relatively high market share. In addition to maintaining existing customers, the company has established a marketing network and expanded to 16 new customers." Currently, the company has established long-term and stable cooperative relationships with TZE, CSI, Shuangliang Eco-Energy, Qinghai Gokin, Anhui Fuxing, and other large and medium-sized monocrystalline silicon wafer producers.
The sluggish sales have led to an increase in OJing Technology's inventory. According to its 2023 annual report, OJing Technology's quartz crucible inventory increased by 72.14% compared to the beginning of the period. The main reason is the gradual replacement of P-type cells by N-type cells in the photovoltaic industry, and the transition of customer crystal pulling technology from P-type to N-type. During this transition, customer usage parameters for crucibles must be adjusted accordingly, and the company isolates and conducts technical reviews for undelivered crucible products.
In response, while ramping up production, OJing Technology has begun product upgrades. "Currently, the company has 24 production lines, and after the full expansion of Ningxia quartz crucible Phase I and Phase II projects, the total annual production capacity will reach 324,000 units," revealed OJing Technology's General Manager, An Xutao, during the performance meeting. An Xutao further explained that with the upgrading of downstream crystal pulling processes and the continuous increase in the proportion of large-size and N-type monocrystalline silicon wafers, quartz crucibles, as essential auxiliary materials in photovoltaic crystal pulling, possess consumable properties and will experience increased demand for large-size, high-quality, and long-life quartz crucibles. OJing Technology stated that N-type products impose higher requirements on controlling carbon, oxygen, and impurity content, consequently demanding higher quality quartz crucibles. The company will continuously upgrade its products and improve its technology in response to industry trend changes, implementing effective cost reduction and efficiency enhancement measures.
As of the time of writing, OJing Technology's per-share value stands at CNY 39.65, with a total market value of CNY 7.628 billion.