Jingsheng Electromechanical (300316.SZ): Navigating the Photovoltaic Trough; Strategic Pivot to SiC and Space PV Drives Long-Term Alpha

Date: January 30, 2026
Analyst: Institutional Research Team
Rating: BUY (Maintained)
Current Price: CNY 46.92
Target Price Implied by Valuation: Upside potential driven by multiple expansion in high-growth segments (SiC/Space) despite near-term earnings compression.

Executive Summary

Jingsheng Electromechanical (hereinafter referred to as "Jingsheng" or the "Company"), a global leader in crystal growth equipment and materials, has released its preliminary performance guidance for the fiscal year 2025. The results reflect a company in transition, navigating the severe cyclical downturn of the traditional terrestrial photovoltaic (PV) sector while aggressively capitalizing on emerging high-growth vectors: large-size Silicon Carbide (SiC) substrates and space-based photovoltaics.

Key Financial Highlights for 2025:
* Net Profit Guidance: The Company expects attributable net profit to range between CNY 878 million and CNY 1.255 billion, representing a year-over-year (YoY) decline of 50%–65%. The midpoint estimate is CNY 1.067 billion (-57.5% YoY).
* Core Profitability: Deducted non-recurring net profit is estimated at CNY 658 million to CNY 975 million, a YoY decline of 60%–73%.
* Quarterly Inflection: Notably, Q4 2025 shows a significant sequential and structural improvement. Estimated Q4 net profit is CNY 166 million, marking a substantial turnaround from the CNY 450 million loss recorded in Q4 2024, although it represents a 36.7% quarter-on-quarter (QoQ) decline from Q3 2025 levels.

While the headline numbers indicate significant pressure from the PV cycle, our analysis suggests that the market may be underappreciating the strategic pivots occurring within Jingsheng’s business model. The sharp contraction in traditional PV equipment demand and material prices (quartz crucibles, diamond wire) has been largely priced in. The core investment thesis now rests on three pillars:
1. Resilience in Overseas & Space PV: Leveraging dominant market share in single-crystal furnaces to capture robust overseas demand (particularly in the US) and pioneering the supply chain for GW-scale space solar power stations.
2. SiC Substrate Scale-up: The ramp-up of 900,000 wafers/year capacity (8-inch conductive) and the breakthrough in 12-inch semi-insulating substrates position Jingsheng as a critical enabler for next-generation power electronics and advanced packaging.
3. Semiconductor Equipment Diversification: Successful penetration into advanced packaging, large silicon wafers, and critical components provides a diversified revenue stream less correlated with the PV cycle.

We maintain our BUY rating. We forecast net attributable profits of CNY 1.0 billion, CNY 1.25 billion, and CNY 1.54 billion for 2025, 2026, and 2027, respectively. At current levels, the stock trades at approximately 61x 2025E P/E, compressing to 49x in 2026E and 40x in 2027E. Given the high barrier-to-entry in SiC and space PV technologies, we believe the current valuation offers an attractive entry point for long-term institutional investors willing to look through the transient PV headwinds.

Key Takeaways

1. Performance Review: Cyclical Bottoming Out Amidst Structural Shifts

The 2025 financial performance reflects the intense competitive landscape and inventory corrections within the global solar industry. However, a granular look at the data reveals signs of stabilization and strategic realignment.

1.1 Earnings Decomposition

The projected net profit decline of ~57.5% is primarily attributed to two factors:
* Volume Contraction in PV Equipment: As global PV manufacturers delayed capacity expansion due to oversupply and margin compression, orders for new crystal growth equipment slowed.
* Price Erosion in Consumables: The prices of key material products, specifically quartz crucibles and diamond cutting wires, have declined significantly due to intensified competition and reduced downstream demand.

However, the Q4 2025 turnaround is a critical signal. Moving from a loss of CNY 450 million in Q4 2024 to a profit of CNY 166 million in Q4 2025 indicates that the company has successfully managed cost structures, optimized inventory, and potentially begun recognizing revenue from new, higher-margin segments (SiC and overseas projects). The QoQ decline in Q4 likely reflects seasonal factors and the timing of project completions rather than a deterioration in fundamentals.

1.2 Financial Health and Cash Flow

Despite the profit decline, Jingsheng maintains a robust balance sheet, which is crucial for funding its R&D-intensive expansion into semiconductors.

Source: Company Reports, Dongwu Securities Institute Estimates

The projected surge in Operating Cash Flow to CNY 5.156 billion in 2025E, despite lower net income, suggests a massive release of working capital (likely from reduced inventory build-up and collection of receivables). This cash generation capability provides the fuel for capital expenditures in SiC and semiconductor facilities without excessive leverage. The资产负债率 (Debt-to-Asset Ratio) is projected to decrease from 43.16% in 2024 to 39.23% in 2025, further de-risking the balance sheet.

2. Growth Driver I: The Space Photovoltaic Revolution

Perhaps the most differentiated aspect of Jingsheng’s future growth profile is its exposure to the nascent but rapidly accelerating space photovoltaic market. This segment represents a paradigm shift from terrestrial constraints to orbital opportunities.

2.1 Market Dynamics: The Satellite Boom

The demand for space-based power is being driven by an exponential increase in satellite launches. Two key developments underscore this trend:
1. China’s Low-Earth Orbit (LEO) Ambitions: The China Academy of Radio Science Innovation has applied to the International Telecommunication Union (ITU) for rights to 200,000 LEO satellites. This constitutes one of the largest constellation plans globally.
2. SpaceX Starlink Expansion: SpaceX is accelerating the deployment of its second-generation Starlink constellation, targeting 42,000 satellites.

These constellations require reliable, high-efficiency power sources. Traditional terrestrial solar solutions are insufficient for the mass deployment required by these mega-constellations due to weight, rigidity, and cost constraints.

2.2 Technological Solution: Why Silicon HJT?

Historically, space applications relied on triple-junction Gallium Arsenide (GaAs) cells due to their high efficiency and radiation resistance. However, GaAs is prohibitively expensive and difficult to scale to the GW-level capacities now required for massive constellations and future space solar power stations.

Jingsheng is positioning itself at the forefront of the alternative solution: Silicon-based Heterojunction (HJT) technology.

• Short-Term Optimal Choice: Silicon HJT offers a compelling value proposition for space applications:

  • Flexibility & Weight Reduction: Thin-film silicon HJT modules can be manufactured on flexible substrates, significantly reducing launch mass—a critical cost driver in space economics.
  • Cost Efficiency: Leveraging the mature terrestrial silicon supply chain allows for drastically lower costs compared to III-V compound semiconductors.
  • Material Availability: Unlike GaAs, which faces raw material bottlenecks, silicon is abundant.
  • Performance: While slightly less efficient than GaAs in ideal conditions, modern HJT cells offer sufficient efficiency for LEO applications, especially when weighted against cost and manufacturability.

• Long-Term Evolution: The roadmap points towards Perovskite-HJT Tandem Cells. Jingsheng’s expertise in both HJT and emerging perovskite technologies positions it to lead this next-generation transition, offering even higher efficiencies while maintaining the cost benefits of silicon.

2.2 Investment Implication

Jingsheng is not merely a supplier but a technology enabler for the space economy. As the industry shifts from prototype to mass production (GW-scale), Jingsheng’s ability to provide integrated manufacturing solutions for flexible, lightweight silicon HJT modules creates a new, high-margin revenue stream that is largely decoupled from the cyclicality of terrestrial utility-scale solar farms.

3. Growth Driver II: Overseas Terrestrial PV Resilience

While the domestic Chinese PV market faces severe overcapacity and price wars, the overseas market—particularly the United States and Europe—remains robust due to policy support and energy security concerns.

3.1 US Market Acceleration

According to data from Mordor Intelligence:
* Installed Capacity Growth: The cumulative PV installed capacity in the US is projected to rise from ~133 GW in 2024 to 203.85 GW in 2025, a remarkable 53% YoY growth.
* New Additions: This implies approximately 70 GW of new installations in 2025 alone.
* Long-Term Trajectory: By 2030, total US PV capacity is expected to reach 412 GW, representing a Compound Annual Growth Rate (CAGR) of 15.11% from 2025 to 2030.

3.2 Jingsheng’s Competitive Moat

Jingsheng is uniquely positioned to capitalize on this overseas boom:
* Global Market Leadership: The Company holds a leading international market share in single-crystal furnace technology. Its equipment is recognized for high yield, low energy consumption, and automation capabilities.
* Smart Unmanned Factory Solutions: Beyond selling individual machines, Jingsheng offers comprehensive "smart factory" solutions. This holistic approach is increasingly valued by overseas manufacturers who face labor shortages and seek to maximize operational efficiency.
* Export Acceleration: As trade barriers and local content requirements (such as the US Inflation Reduction Act) encourage local manufacturing, overseas players are expanding capacity. Jingsheng’s established global service network and technological superiority make it a preferred partner for these expansions.

This overseas diversification acts as a crucial hedge against domestic slowdowns, ensuring steady cash flows from the traditional PV business while the company transitions its product mix.

4. Growth Driver III: Silicon Carbide (SiC) Substrate Dominance

The third and perhaps most financially significant pillar of Jingsheng’s growth strategy is its aggressive expansion in the Silicon Carbide (SiC) substrate market. SiC is the material of choice for high-voltage, high-frequency power electronics, essential for Electric Vehicles (EVs), renewable energy inverters, and industrial drives.

4.1 Capacity Expansion: Scaling to Meet Demand

Jingsheng has outlined a clear and aggressive capacity roadmap, transitioning from pilot lines to mass production scales.

• Conductive Type Substrates (Power Electronics):

  • Existing Capacity: 300,000 wafers/year at the Shangyu facility.
  • New Expansion: Construction of a new 600,000 wafers/year capacity line for 8-inch substrates.
  • Total Planned Capacity: Upon completion, total conductive substrate capacity will reach 900,000 wafers/year.
  • International Footprint: A planned 240,000 wafers/year slicing, grinding, and polishing (SGP) capacity in Malaysia. This geographic diversification mitigates geopolitical risks and serves international customers more effectively.

• Strategic Timing – The 8-Inch Transition:
  The industry is currently undergoing a critical transition from 6-inch to 8-inch SiC wafers. 8-inch wafers offer significant economic advantages:

  • Chip Yield: Approximately 90% more chips per wafer compared to 6-inch.
  • Cost Reduction: Estimated 20-30% reduction in chip cost due to better edge utilization and economies of scale.

  Jingsheng’s "first-mover advantage" in 8-inch substrate production allows it to capture premium pricing and secure long-term contracts with major device manufacturers who are urgently seeking reliable 8-inch supply. As global device makers shift their capacity to 8-inch, Jingsheng is poised to become a primary beneficiary.

4.2 Semi-Insulating Substrates: Opening New Frontiers

Beyond power electronics, Jingsheng is breaking ground in semi-insulating SiC substrates, which are used in radio frequency (RF) devices and advanced computing.

• 12-Inch Breakthrough: The Company’s first 12-inch semi-insulating SiC substrate processing pilot line has officially commenced operations ("passed through the line").

• New Application Spaces:

  • AR/VR Glasses: High-performance RF components for next-generation augmented reality devices.
  • CoWoS Interposers: Advanced packaging technologies for AI chips and high-performance computing (HPC) require high-quality semi-insulating substrates for thermal management and signal integrity.

  This development diversifies Jingsheng’s customer base beyond the automotive sector into the high-growth consumer electronics and AI infrastructure markets. The ability to produce 12-inch semi-insulating substrates places Jingsheng in an elite group of global suppliers, enhancing its technological moat.

5. Semiconductor Equipment & Components: Deepening the Moat

Jingsheng is not just a materials provider but a comprehensive semiconductor equipment platform. Its subsidiary, Jingsheng Semiconductor, is strategically positioned across four key domains: Large Silicon Wafers, Advanced Packaging, Advanced Process Nodes, and SiC Equipment.

5.1 Equipment Portfolio Breakdown

5.2 Critical Components: Jinghong Precision

The subsidiary Jinghong Precision focuses on the manufacturing of critical semiconductor components. This is a high-margin, sticky business segment.
* Capabilities: Specialized welding, precision assembly, and semiconductor-grade surface treatment.
* Product Range: Ultra-large vacuum chambers, spindles, ceramic disks, and other critical parts.
* Customer Base: Batch supply to leading domestic equipment manufacturers and Fabrication Plants (FABs).
* Import Substitution: As China seeks to localize its semiconductor supply chain, Jinghong Precision plays a vital role in replacing imported critical components, ensuring supply chain security for domestic fabs.

This diversified equipment and components portfolio reduces reliance on any single product line and embeds Jingsheng deeply into the broader semiconductor infrastructure of China.

Risks / Headwinds

While the long-term outlook is positive, institutional investors must carefully weigh the following risks:

1. Downstream Application Expansion Risks

• Space PV Adoption Rate: The space photovoltaic market is still in its early stages. Delays in satellite launch schedules, regulatory hurdles regarding spectrum/orbit allocation, or slower-than-expected adoption of silicon HJT over GaAs could delay revenue recognition from this segment.
• SiC Demand Volatility: The EV market, a primary driver for SiC, has shown signs of slowing growth in certain regions. If EV adoption rates stagnate or if automakers revert to IGBTs for lower-end models due to cost pressures, SiC substrate demand could fall short of expectations.

2. Technology R&D Risks

• Yield Challenges: Scaling SiC substrate production, particularly for 8-inch conductive and 12-inch semi-insulating wafers, involves complex technical challenges. Failure to achieve high yields consistently could erode margins and damage customer relationships.
• Competitive Technological Shifts: Rapid advancements in alternative materials (e.g., Gallium Oxide, Diamond semiconductors) or competing PV technologies (e.g., pure Perovskite without HJT) could render current investments less valuable over the long term.

3. Geopolitical and Trade Risks

• Export Controls: As Jingsheng expands its semiconductor equipment footprint, it may face increased scrutiny or export restrictions from Western governments, potentially limiting access to certain international markets or supply chains.
• Overseas Policy Changes: Changes in US trade policy (e.g., tariffs, removal of IRA benefits) could impact the projected growth in the US PV market, affecting Jingsheng’s overseas equipment sales.

4. Domestic PV Cycle Duration

• Prolonged Downturn: If the oversupply in the domestic PV sector persists longer than anticipated, the drag on Jingsheng’s traditional equipment and material businesses could be more severe and prolonged, impacting overall cash flow and profitability metrics in the near term.

Rating / Sector Outlook

Sector Context: From Volume to Value

The broader photovoltaic and semiconductor equipment sector is undergoing a structural bifurcation.
* Traditional PV: The sector is in a "clearing" phase, where weaker players are exiting, and leaders are consolidating. Growth is no longer about sheer volume but about technological efficiency (N-type, HJT, BC) and overseas expansion.
* Semiconductor/SiC: This sector remains in a high-growth trajectory, driven by electrification, AI, and national security imperatives. Valuations here are supported by higher barriers to entry and stronger visibility on long-term demand.

Jingsheng’s Positioning

Jingsheng is successfully transitioning from a "PV Cycle Play" to a "Hard Tech Platform."
* Valuation Re-rating Potential: Historically, PV equipment stocks trade at lower multiples (10-20x P/E) due to cyclicality. Semiconductor and specialized material companies often command higher multiples (30-50x+). As Jingsheng’s revenue mix shifts towards SiC and Semiconductor equipment, we anticipate a gradual re-rating of its valuation multiple.
* Current Valuation: At ~61x 2025E P/E, the stock appears expensive relative to its current earnings. However, this multiple reflects the trough in earnings. Looking at 2027E, the P/E compresses to ~40x. For a company with dominant market shares in high-growth niches (SiC, Space PV), a 40x forward P/E is reasonable, especially given the scarcity of such integrated platforms in the A-share market.

Recommendation: BUY (Maintained)

We maintain our BUY rating. The current price adequately reflects the negative sentiment surrounding the traditional PV business. It does not fully price in the optionality and growth potential of the SiC and Space PV segments. For institutional investors with a 12-24 month horizon, the risk-reward profile is favorable.

Investment View

1. Core Investment Logic: The "Three-Engine" Growth Model

Investors should view Jingsheng not as a single-business entity, but as a conglomerate of three distinct growth engines, each at a different stage of maturity:

1. Cash Cow (Stabilizing): Traditional PV Equipment & Materials.

   • Status: Cyclical bottom.
   • Role: Generates steady cash flow (despite current dip) and funds R&D. Overseas expansion provides a floor for demand.
   • Investment Action: Monitor for margin stabilization and market share gains in overseas tenders.

2. Star Player (Ramping): Silicon Carbide (SiC) Substrates.

   • Status: Rapid capacity expansion and customer qualification.
   • Role: Primary driver of revenue growth and margin expansion in the medium term (2025-2027). The shift to 8-inch is a key catalyst.
   • Investment Action: Track quarterly updates on 8-inch yield rates, customer contract announcements, and the utilization rate of the new 600k wafer capacity.

3. Option Value (Emerging): Space PV & Advanced Semiconductor Equipment.

   • Status: Early commercialization / Pilot phase.
   • Role: Provides long-term upside optionality and valuation premium. Space PV could become a multi-billion dollar market by 2030.
   • Investment Action: Watch for major satellite constellation awards and breakthroughs in 12-inch semi-insulating substrate commercialization.

2. Financial Forecast & Sensitivity

Our base case assumes a gradual recovery in traditional PV margins and successful ramp-up of SiC volumes.

Note: P/E calculated based on current price of CNY 46.92.

Sensitivity Analysis:
* Bull Case: If SiC yields exceed expectations and Space PV orders accelerate, 2027 Net Profit could exceed CNY 1.8 billion, implying a P/E of ~34x.
* Bear Case: If PV downturn deepens and SiC adoption slows, 2027 Net Profit might stagnate at CNY 1.2 billion, implying a P/E of ~51x, which would pressure the stock price.

3. Strategic Catalysts to Watch

In the coming 6-12 months, investors should monitor the following specific catalysts:

1. 8-Inch SiC Customer Qualifications: Announcements of long-term supply agreements with major Tier-1 EV manufacturers or IDM foundries for 8-inch wafers.
2. Space PV Pilot Projects: News regarding Jingsheng’s involvement in specific satellite launches or partnerships with aerospace entities for HJT module supply.
3. Quarterly Margin Trends: Evidence of gross margin expansion in Q1/Q2 2026, signaling that the high-margin SiC/semi mix is offsetting PV weakness.
4. Overseas Order Book: Significant new orders from US or European PV manufacturers for smart factory solutions.

4. Conclusion

Jingsheng Electromechanical stands at a pivotal juncture. The pain of the PV cycle is real and reflected in the 2025 earnings guidance. However, the company’s proactive diversification into SiC, Space PV, and advanced semiconductor equipment demonstrates strong management foresight and execution capability.

For institutional investors, the key is to look past the transient earnings dip and focus on the structural growth drivers. Jingsheng is transforming from a cyclical equipment vendor into a foundational technology platform for the next generation of energy and computing infrastructure. The combination of dominant market share in crystal growth, leading-edge SiC capacity, and pioneering space PV technology creates a compelling long-term investment case.

We recommend accumulating positions on weakness, with a target horizon of 12-24 months, as the market gradually recognizes the value of these new growth engines. The current valuation, while appearing high on trailing metrics, is justified by the quality of assets and the scarcity of the Company’s technological capabilities in the A-share market.

Appendix: Detailed Financial Analysis

A. Balance Sheet Strength

Jingsheng’s balance sheet remains healthy, providing the necessary flexibility to navigate the downturn and invest in growth.

• Liquidity: The projected increase in Cash and Cash Equivalents from CNY 3.46 billion (2024) to CNY 7.71 billion (2025E) is a standout feature. This liquidity buffer protects the company from credit tightening and allows for opportunistic M&A or R&D spending.
• Inventory Management: Inventory is projected to decrease from CNY 10.88 billion (2024) to CNY 9.82 billion (2025E). This destocking is essential for improving cash conversion cycles and indicates prudent management in anticipation of slower PV demand.
• Debt Structure: The company maintains a conservative debt profile. Long-term borrowings are manageable, and the absence of significant bond payables reduces refinancing risk. The Debt-to-Asset ratio trending below 40% is indicative of a low-leverage, high-resilience corporate structure.

B. Cash Flow Dynamics

The projected Operating Cash Flow (OCF) of CNY 5.156 billion in 2025E is significantly higher than the Net Profit of CNY 1.007 billion. This divergence is primarily driven by:
1. Working Capital Release: A positive change in working capital of CNY 2.929 billion, largely due to the reduction in inventory and potentially faster collection of receivables.
2. Non-Cash Charges: Depreciation and amortization of CNY 783 million add back to cash flow.

This strong cash generation is critical. It means the company can fund its capital expenditures (projected at CNY 400 million annually) internally, without diluting shareholders or taking on excessive debt. Free Cash Flow (FCF) is expected to remain positive and robust, supporting potential future dividend increases or share buybacks.

C. R&D Efficiency

Jingsheng continues to invest heavily in R&D, with expenses projected at CNY 782 million in 2025E. While this is a decrease from 2024 levels (CNY 1.119 billion), it remains substantial relative to revenue. The focus of this spending has likely shifted from broad PV improvements to targeted high-tech areas:
* SiC crystal growth optimization.
* Space-grade HJT cell efficiency.
* Advanced semiconductor equipment prototyping.

The return on this R&D investment is beginning to materialize in the form of new product launches (12-inch SiC, UV laser grooving) and market differentiation. Investors should view R&D not as a cost burden, but as the primary engine of future margin expansion.

D. Valuation Methodology

We employ a blended valuation approach:
1. Sum-of-the-Parts (SOTP):
* PV Business: Valued at 15x 2026E Earnings (conservative, reflecting cyclical nature).
* SiC Business: Valued at 40x 2026E Earnings (premium, reflecting high growth and scarcity).
* Semiconductor/Space: Valued at 50x 2026E Earnings (high premium for optionality and tech leadership).
2. Relative P/E: Comparing Jingsheng to peers in the semiconductor equipment space (e.g., NAURA, ACM Research) and SiC pure plays (e.g., TankeBlue, though unlisted comparables exist globally like Wolfspeed, OnSemi). Jingsheng’s diversified model warrants a discount to pure-play semi equities but a premium to pure-play PV equities.

Our maintained "Buy" rating reflects the belief that the market is currently valuing Jingsheng too much like a PV company and too little like a Semiconductor/Space Tech company. As the revenue mix shifts, this mispricing should correct.

Disclaimer

This report is prepared by Dongwu Securities Institute for institutional clients only. It does not constitute an offer to sell or a solicitation of an offer to buy any securities. The information contained herein is based on sources believed to be reliable, but Dongwu Securities does not guarantee its accuracy or completeness. Past performance is not indicative of future results. Investors should conduct their own independent research and consult with financial advisors before making investment decisions.

Analyst Certification: The analysts named in this report certify that all of the views expressed in this report accurately reflect their personal views about the subject company or companies and its or their securities. No part of their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this report.

Important Disclosures: Dongwu Securities may have a banking relationship with the company covered in this report. Investors should assume that Dongwu Securities is seeking or will seek investment banking business from the company covered in this report.

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