\u3000\u3000 Jolywood (Suzhou) Sunwatt Co.Ltd(300393) (300393)
The extension of the industrial chain opens up the space for long-term growth, and the troika of backplane, battery module and distributed photovoltaic goes hand in hand
The company was founded in March 2008 and listed on the Shenzhen Stock Exchange gem in 2014. It is a unique A-share listed company with photovoltaic backplane as its main business. From 2015 to 2016, we continuously expanded the market, acquired other enterprises and opened branches. In 2017, the company’s PV backplane shipments ranked first in the world. In 2019, the company independently developed and mass produced n-topcon batteries, becoming the only GW level mass-produced n-type TOPCON battery manufacturer in China. At present, the company has formed three business segments: photovoltaic backplane, high-efficiency battery and module and photovoltaic application system. In 2021, the revenue scale of backplane, battery module and distributed system gradually converged. In recent years, the company’s profit fluctuated greatly. In 2021, the revenue scale and profitability of the company improved quarter by quarter.
The backplane coating technology shows the cost advantage, the output increases steadily and the profit is stable all year round
In recent years, the market share of the company’s backplane products in the industry is about 25%, ranking among the top three in the industry for many years. Through independent research and development, the company adopts organic-inorganic nano hybrid technology and molecular design interconnection and penetration technology to develop FEVE fluorocarbon coating (FFC) with tetrafluororesin as the main body. FEVE is coated on PET film through coating technology to form FFC coated fluorocarbon film, which breaks the import monopoly and greatly reduces the cost of back sector. The cost of coated back sector of the company is lower than that of composite back sector, The gross profit margin is at a high level among Listed Companies in the same industry. The expansion of the company’s backplane production capacity is stable, the output has increased steadily, and the gross profit margin has been maintained at about 20% in recent years.
Low price overseas orders drag down the profit of battery module business, and it is expected to increase both volume and profit in 2022
The company’s high-efficiency battery and module business is mainly the R & D, production and sales of n-type single crystal double-sided Cecep Solar Energy Co.Ltd(000591) batteries and modules. In 2020, the company’s capacity of battery cells and components will basically achieve 1:1 matching. Battery cells are used for supporting components and shipped in the form of components. Throughout 2021, the gross profit margin of the company’s battery module sector was negative, which was due to the sharp rise in the purchase price of upstream raw materials, the sharp rise in export sea freight, the signing of more overseas orders at the end of 2020 and the beginning of 2021, and the timely performance of orders in 2021. It is expected that the upstream price of the industrial chain will decline in 2022. In addition to the increase of unit profit, in 2022, with the release of the company’s new capacity, it is expected that the annual component shipment will reach 6Gw (of which 2gw is used for distributed business), which is significantly higher than the shipment of about 1GW in 2021. The volume and profit will rise together. The company will have 20GW battery chip capacity in the next 2-3 years.
The distributed business model has changed from credit sales to EPC mode, which speeds up the turnover and alleviates the capital pressure
In 2021, the company carried out household distributed business in the form of photovoltaic power station project contracting for the first time. Compared with the previous installment payment mode, the EPC mode has the advantages of short payment collection period, small capital demand and light asset operation. Under the “whole county promotion” mode, large private enterprises are still the main force. Compared with the scattered primary and secondary dealers in the market, they have more strength to cooperate with the government and central state-owned enterprises. We believe that with the rapid growth of the industry, the industry concentration will continue to improve. As one of the distributed leading enterprises, the company will benefit significantly. It is expected that the company can realize distributed construction and delivery scale of more than 2gw in 2022.
Profit forecast and investment suggestions: we predict that from 2021 to 2023, the company will realize operating revenue of RMB 7.09/16.49/20.78 billion, net profit attributable to parent company of RMB -278/7.42/1.05 billion and EPS of RMB -0.25/0.68/0.96 respectively, corresponding to current PE valuation of – / 27.01/19.09 times, and be rated as “buy”.
Risk warning: the price of upstream raw materials fluctuates sharply; The demand for new PV installation is less than expected; The construction progress of the project is less than expected; Macroeconomic fluctuations.
