Maintain Neutral: Photovoltaic equipment under pressure; semiconductors and SiC open longer-term growth space

Overview

This report is UBS's company research on Zhejiang Jingsheng M&E. The core conclusion is that domestic photovoltaic demand remains under pressure, and growth from overseas photovoltaic and SBSP orders is insufficient to fully offset domestic weakness; however, semiconductor equipment and SiC substrate/materials businesses are opening new growth potential. UBS maintains a Neutral rating and raised the target price from Rmb32.00 to Rmb44.30.

Core views

UBS believes that as a leader in crystal-growing equipment and quartz crucibles, Jingsheng has the capability to expand from photovoltaic equipment into semiconductor equipment. In the near term, the domestic photovoltaic sector remains constrained by excess capacity, price declines, trade barriers, technical bottlenecks, and supply-chain coordination issues, with equipment orders expected to fall meaningfully; in the longer term, semiconductor equipment, SiC substrates, overseas photovoltaics, and SBSP may provide incremental space. However, because the market has already priced in an SBSP and semiconductor premium, current valuation is considered broadly fair.

Analysis framework

The report evaluates Jingsheng through segment-level assessments, order and revenue forecasts, earnings forecast revisions, peer valuation comparisons, and an SOTP framework. UBS focuses on comparing domestic photovoltaic equipment downside pressure, the offset from overseas and SBSP demand, semiconductor equipment order backlog, SiC capacity expansion, and the timing of margin expansion.

Methodology notes

• Valuation methodsSOTP

  Sum-of-the-parts valuation

  UBS switched valuation from a single PE multiple to SOTP to separately reflect different growth curves for materials and equipment businesses; SiC wafers are valued at 22x 2027E P/S, while photovoltaic/semiconductor equipment and other businesses are valued at 32x 2027E PE.

• Earnings Forecast2026-28E Forecast Revision

  Downward revenue and earnings revisions

  Because photovoltaic equipment demand was weaker than expected, UBS reduced 2026-28 revenue forecasts by 20-27% and earnings forecasts by 19-30%.

• Relative ValuationPE and P/B Comparison

  Relative valuation versus historical ranges

  Jingsheng trades at about 58x 2026E PE, above its historical average of roughly 40x and industry average of roughly 30x; at the same time, 2026E P/B is around 3.1x, below the historical average by 0.5 standard deviation.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Zhejiang Jingsheng M&E 300316.SS

  Covered company and investment subject

  Strengths

  It holds a leading position in crystal-growing equipment and quartz crucibles; the photovoltaic equipment base provides process know-how and customer foundation to expand into semiconductor equipment; SiC strategy focuses on 8-inch capacity without legacy burden of traditional 6-inch assets.

  Weaknesses

  Domestic photovoltaic equipment demand is in a trough, with excess capacity in the industry and weak downstream capex appetite; device revenue remains sensitive to the photovoltaic cycle.

  Comparison

  2026E PE is around 58x, above the historical average of about 40x and industry average of about 30x; P/B is about 3.1x, below the historical average by 0.5 standard deviation.

  Risks

  Semiconductor equipment orders below expectations, weaker-than-expected export demand, intensified competition, and further decline in photovoltaic equipment ASP.

• Semiconductor Equipment and SiC Substrate Business

  Future growth driver

  Strengths

  Order backlog exceeded Rmb3.7bn by end-2025; a plan to add 50k-piece monthly domestic 8-inch SiC capacity in 2026; management guided that SiC substrates are expected to turn profitable in Q4 2026.

  Weaknesses

  New order growth may slow; profit release depends on capacity ramp, yield, and downstream demand.

  Comparison

  UBS values SiC substrates at 22x 2027E P/S, stating this is broadly consistent with SICC and higher than industry peers due to faster expansion and lack of legacy 6-inch assets.

  Risks

  Semiconductor/SiC execution slower than expected, demand below expectation, and competition pressuring price or margins.

• Photovoltaic Equipment Business

  Traditional core business and near-term drag

  Strengths

  The company has relatively high global share in photovoltaic furnace and crucible sales, and SBSP may require higher-performance wafers, creating incremental orders.

  Weaknesses

  Domestic demand shows no clear recovery signs, and the industry still faces overcapacity, price declines, and trade barriers.

  Comparison

  UBS expects device revenue to decline by 45% and 5% year-on-year in 2026 and 2027, respectively, with possible recovery by 2028E.

  Risks

  Domestic photovoltaic capacity expansion weaker than expected, falling ASP for photovoltaic equipment, and continued weakness in downstream capex.

Key data

• 12-Month Target PriceRmb44.30Raised from Rmb32.00 mainly due to the valuation method shift to SOTP and roll-forward to 2027E.
• Current PriceRmb43.43As of 2026-04-15.
• RatingNeutralMaintain neutral rating.
• 2026E PE58xAbove historical average of about 40x and industry average of about 30x.
• 2026E Device Revenue ForecastDown 45% year-on-yearOverseas orders are expected to support part of photovoltaic equipment revenue but cannot offset weak domestic demand.
• 2027E Device Revenue ForecastDown 5% year-on-yearUBS expects a possible inflection in 2028E.
• 2026-28E Revenue Forecast RevisionDown 20-27%Reflects a more cautious view, especially on the device business and domestic photovoltaic equipment.
• 2026-28E Earnings Forecast RevisionDown 19-30%UBS believes consensus has not fully reflected post-earnings adjustments.
• IC/Semiconductor Equipment and Compound Order BacklogAbove Rmb3.7bnAs of end-2025.
• 2025 Revenue MixDevices 74%, Materials 22%About 80% of devices are photovoltaic-related; SiC substrates contribute about Rmb200-300m of materials revenue.
• Global SBSP Demand Forecast115GW by 2035Source: UBS utility team forecast.
• SiC Capacity PlanAdd 50k domestic 8-inch wafers per month in 2026The company is also advancing its Malaysia base; management guided that SiC wafers become profitable in Q4 2026 and see accelerating profit release in 2027 as scale increases.

Impact & implications

For investors, Jingsheng's near-term tension is balancing weaker traditional photovoltaic equipment demand against valuation premium, while the longer-term catalyst lies in semiconductor equipment, SiC substrates, overseas photovoltaics, and SBSP. If semiconductor orders, exports, or SiC profit progress exceed expectations, valuation could gain support; if domestic photovoltaic overcapacity worsens, prices continue to fall, or semiconductor execution lags, both earnings and valuation may come under pressure.

Risks

• Upside risk: Semiconductor equipment orders stronger than expected.
• Upside risk: Export demand stronger than expected.
• Upside risk: Semiconductor/SiC progress faster than expected.
• Upside risk: Faster-than-expected expansion of solar-grade silicon wafer capacity or rising photovoltaic equipment ASP.
• Downside risk: Semiconductor equipment orders weaker than expected.
• Downside risk: Export demand weaker than expected.
• Downside risk: Intensified market competition.
• Downside risk: Semiconductor/SiC progress slower than expected.
• Downside risk: Solar wafer capex expansion weaker than expected or photovoltaic equipment ASP declines.

What to watch

• Whether domestic photovoltaic equipment orders show a turning point.
• Whether overseas photovoltaic orders can continue to support equipment revenue.
• Whether SBSP-related equipment orders will truly scale up.
• Whether IC/semiconductor equipment new orders continue to grow.
• Progress of 8-inch SiC substrate capacity ramp, yield, and profit realization.
• Progress of the Malaysia base construction.
• Whether SiC substrates achieve management's profit guidance in Q4 2026.
• Whether industry valuation continues to re-rate around semiconductor and SBSP themes.