Sichuan Hebang Biotechnology Co.Ltd(603077) (603077)
The company is the cost leader of integrated salt and gas chemical industry. Relying on its own salt mine reserves of 98 million tons and the advantages of natural gas supply in Southwest China, It has formed an annual production capacity of 1.1 million tons of combined alkali (soda + ammonium chloride), 465000 tons of glass, 4.3 million square meters of coated glass, 150000 tons of glyphosate and 50000 tons of glyphosate (as of the 2021 semi annual report). Benefiting from good cost control, the company's complete cost is significantly ahead and the net interest rate leads the industry. In the short term, the supply and demand pattern of the company's original main business is good and maintains a high boom. In the medium and long term, the company will take photovoltaic materials as the next focus, and is expected to open the second growth curve after new businesses are put into operation in 2022.
Focus on photovoltaic materials, improve valuation and promote growth. Photovoltaic is the most promising renewable and clean energy in China and an important path to achieve "carbon neutralization and carbon peak". China has become a global photovoltaic supply center. In the future, the new installed capacity of global photovoltaic will continue to drive the demand for photovoltaic glass, silicon wafer and other materials in China. In this context, the company focuses on photovoltaic materials:
Photovoltaic glass: driven by photovoltaic installation and double glass penetration, China's demand for photovoltaic glass is expected to increase to 16 million tons in 2025. Relying on the upstream soda ash production capacity, the company has invested and built an annual output of 8GW of photovoltaic glass in Chongqing this year and 8GW of photovoltaic glass in Panzhihua in 2022. Building an integrated industrial chain of raw salt soda ash photovoltaic glass will have significant cost advantages and industrial chain synergy benefits.
Ultra efficient n-type photovoltaic silicon wafer: the conversion efficiency of n-type battery is higher than that of p-type battery. At present, it is at the inflection point of penetration. With the localization of equipment, the continuous decline of non silicon cost and the continuous improvement of conversion efficiency, it is expected that the proportion of n-type batteries will reach 25-30% in 2025, resulting in a large demand for n-type silicon wafers. The company and Tong Xingxue, former chairman of Savills LDK, jointly invested in 10gwn silicon wafer project to seize the opportunity of silicon wafer iteration forced by battery technology iteration. With the continuous production of photovoltaic glass and high-efficiency n-type silicon wafer in 2022, photovoltaic materials are expected to help the company improve its valuation and accelerate its growth.
Glyphosate has a good pattern and high bearing. As the largest IDA manufacturer in China, the company will benefit. New opportunities for planting genetically modified corn and soybean in China are expected to be opened, and glyphosate, as a global mainstream pesticide variety with tolerance traits, will benefit. Moreover, there is little new capacity in the industry in the future. With the optimization of supply and demand pattern, glyphosate began to enter the medium and long-term profit cycle. The company is the largest glyphosate supplier in the world and the largest glyphosate manufacturer of IDA method in China. IDA method has significant cost advantages over glycine method. Glyphosate glyphosate business is expected to continue to contribute significantly to profits while the company lays out new business.
Profit forecast and valuation suggestions. We estimate that the company's operating revenue from 2021 to 2023 will be RMB 11.862/192.43/26.348 billion respectively; The net profit attributable to the parent company is RMB 2.930 billion / 5.221 billion / 6.570 billion respectively; The corresponding PE is 10.73/6.02/4.79 times respectively. The company is an integrated salt and gas chemical manufacturer, whose main business is to maintain high prosperity and thick safety cushion. Meanwhile, the centralized production of new business photovoltaic materials in 2022 is expected to improve the valuation and open up growth space. For the first time, give a "buy" rating.
Risk tip: the product price fell more than expected, and the photovoltaic demand was less than expected.
