At present, the market unanimously expects that there is still a significant deviation in the investment value of photovoltaic modules: the market believes that the module link has large production capacity, the competition is deteriorating, and the price war is imminent. However, we believe that the current market pattern of module links has changed significantly compared with two years ago. The leading enterprises through brands, channels, supply chains The multi-dimensional barriers of product differentiation have been relatively solid, so that it is very difficult for latecomers to catch up. The core competitiveness of the industry lies in sales, operation and technological progress. Whether there is overcapacity is no longer the main contradiction to judge the competition pattern of the industry.
We judge that in the next two years, the trend of head concentration of component enterprises will be further strengthened, and the industry status will continue to improve. It will become a link with strong dominance and voice in the whole industry chain, including downstream operators and EPC companies. The above competitiveness will eventually be reflected in the financial statements, and the profitability will exceed expectations. At present, the corresponding dynamic valuation of component companies is at a relatively low level in all links of the industrial chain. We believe that the above situation will be significantly reversed in 2022 through the performance of component companies exceeding expectations in 1-2 quarters, and the leading component companies are on the road of valuation improvement.
Short term: the price reduction of silicon material brings the profit improvement of integrated components
From the first quarter of 2022, the new capacity of silicon material link will be gradually released. After reviewing the changes of single watt gross profit of Jingke energy under previous silicon material price fluctuations, it can be found that the rise and fall of silicon material price is basically negatively correlated with the single watt gross profit of integrated components. Therefore, in the current round of silicon material price reduction, the single watt profit of integrated component enterprises will also increase significantly.
Medium term: the first-line enterprises have obvious technical advantages, and the n-type era promotes the differentiation of component products. 2022 is the first year of mass production of n-type batteries. The first-line component enterprises can rely on the integration advantages to reduce costs (n-type silicon wafer, series welding process improvement, etc.), and have obvious advantages in n-type technology. The leading component leader in battery technology is expected to contribute differentiated component products to the industry and continue to earn excess profits.
Long term: the voice of head component companies in the industrial chain is becoming more and more prominent
Terminal shipment is an important standard to judge whether component companies have investment value. The core competitiveness of component enterprises lies in the sales end, which is mainly reflected in the enterprise’s brand, channel layout and supply chain management ability, and will eventually be reflected in the shipment of each enterprise. From the shipments of various component enterprises in recent years, it can be seen that the first mover advantage of the head company has been established, and it is gradually widening the gap with other enterprises. We expect that the Cr5 of the module link will be 76.5% in 2022, and the module link will become the best link in the main photovoltaic industry chain in the future.
It should be emphasized that we are optimistic about the head component company. In other words, this link is bound to differentiate. This is not a report optimistic about the component link. We think the investment value of the head enterprise is more clear. Integration is not the only criterion to judge the investment value of component enterprises. The core is to see the volume of goods. The reality is that the market share of Cr5 is 38.2% in 2019 and 76.5% in 2022. This trend will be further improved in the future. This trend will continue to strengthen in the next three years, and the gap between the head and second tier enterprises will become larger and larger, which is also the growth of leading companies.
Investment suggestion: under the background of strengthening the concentration trend of the head of the component link and the gradual rise of n-type battery, we are optimistic about the rising trend of the opening volume of integrated component enterprises, with emphasis on Longi Green Energy Technology Co.Ltd(601012) , Trina Solar Co.Ltd(688599) , Ja Solar Technology Co.Ltd(002459) and Jingke energy.
Risk tip: the demand of photovoltaic industry is less than expected; Technology diffusion leads to the decline of new technology premium; Increased competition in component links.
