(Yicai Global) Jan. 10 -- Shares in Zhejiang Tony Electronic surged by the exchange-imposed upper limit today for the second day running after the Chinese semiconductor materials supplier said it expects net profit for 2022 to a least triple from the year before and on announcing a new long-term supply deal that could be worth CNY4.7 billion (USD693 million).

Tony Electronic’s share price [SHA: 603595] closed up 10 percent at CNY73.32 (USD10.82). The share price also surged by the daily limit yesterday, before the good news was announced.

Tony Electronic expects to rake in net profit of between CNY100 million (USD14.8 million) and CNY110 million in 2022, which equates to a jump of between 199.28 percent and 229.2 percent from a year earlier, the firm said after markets closed yesterday. The extra earnings are thanks to a wider profit margin, an increase in revenue and exchange-rate gains due to the appreciation of the US dollar.

The firm also signed a three-year supply contract yesterday for six-inch silicon carbide wafers which could be worth CNY4.7 billion based on current market prices, although the company did not stipulate the total value of the contract as unit prices for subsequent years are still subject to negotiation.

Tony Electronic will provide the unnamed customer with 135,000 wafers in 2023, 300,000 in 2024, and 500,000 in 2025, the Huzhou, eastern Zhejiang province-based company said. Pre-tax revenue in 2023 alone will amount to CNY675 million (USD99.6 million), it added.

The high electrical conductivity of silicon carbide wafers means they can minimize the power consumption of devices, improve energy conversion efficiency and reduce product size. They are mainly applied in fifth-generation networks, aircraft and new energy vehicles.

Editor: Kim Taylor