Tongwei Co.Ltd(600438) (600438)
Event: the company issued the announcement on the application for public issuance of convertible corporate bonds approved by the issuance Audit Committee of CSRC.
The issuance of convertible bonds was reviewed and approved by the CSRC to accelerate the production capacity construction of photovoltaic materials of the company. On December 6, the company’s application for public issuance of convertible bonds was officially approved by the development and Examination Committee of the CSRC. It plans to raise 12 billion yuan, of which 5.6 billion yuan is used for the construction of 50000 tons of polycrystalline silicon in Leshan phase II and 50000 tons of polycrystalline silicon in Baotou phase II, 2.9 billion yuan is used for the construction of 15gw monocrystalline silicon chip capacity, and 3.5 billion yuan is used to supplement the company’s working capital. At present, the company is accelerating the construction of silicon material and silicon wafer production capacity, with high investment intensity requirements. The smooth promotion of convertible bonds is expected to alleviate the company’s capital pressure and ensure the orderly release of new production capacity.
The industry’s leading new polysilicon projects have been released stably, and the cost reduction and efficiency increase of silicon materials have been continuously promoted. According to the official account of Tongwei group, the first batch of high purity silicon was successfully released in November 30th, the first phase of the 51 thousand phase silicon material project of Yongxiang new energy two phase. The product reached the leading level at a time, the quality climbing speed was ahead of the industry, and the expected production ramp rate will be further enhanced. In addition, in terms of cost control, the project adopts the “sixth generation Yongxiang method” with independent intellectual property rights, which can reduce the comprehensive power consumption to less than 45kwh / kg Si, reduce the thermal energy consumption to 0, reduce the unit consumption of silicon element to 1.04, and improve the quality to above electronic level II. It greatly refreshes the advanced indicators of the industry, which is expected to further reduce the total cost of silicon production. In addition, the 1000 ton electronic verification line built by the company in the same period is also advancing as planned. After the unit is put into operation, it is expected to further improve the quality of high-purity crystalline silicon products to higher quality standards.
Silicon material leader layout, large-scale capacity expansion, consolidate the leading position, lock in silicon material demand for a long time, and ensure the release of capacity. As a leading polysilicon enterprise in the industry, the company takes the lead in arranging large-scale capacity expansion. At present, the company has 130000 tons of polysilicon capacity. The 50000 tons project of Baoshan phase I under construction is expected to be put into operation before the end of 2021. In 2022, the 50000 tons project of Baotou phase II and the 100000 tons project of Leshan phase III are expected to be put into production successively, promoting the company’s capacity to 330000 tons and consolidating its leading position. According to the reply to the second feedback on the application documents for public issuance of convertible corporate bonds of the company, the orders for silicon materials for internal use are currently on hand, corresponding to 209200 tons in 2022 and 233600 tons in 2023. In addition, the company has maintained close communication and cooperation with new entrants in the silicon wafer industry, such as Qinghai Gaojing and Inner Mongolia Shuangliang, It will fully guarantee the release of the company’s new production capacity.
Accelerate the large-scale transformation of battery cells and actively promote the layout of n-type technology. In terms of battery business, the company accelerated its transformation to large-scale. In June 2021, the proportion of 210 shipments of the company increased to 37%. With the gradual increase of the production capacity of Jintang phase I project, the proportion of 210 shipments is expected to further increase. With the production capacity of battery cells under construction put into operation, it is expected that the total battery capacity of the company will exceed 55gw in 2022, of which 210 battery capacity will exceed 35gw. In terms of n-type technology, the company has a layout around the two technical routes of hjt and TOPCON. In terms of heterojunction, the company put into operation 400MW test line in 2019, with the maximum conversion efficiency of 25.18% and mass production conversion efficiency of 24.66%. At present, the company has newly built 1GW heterojunction pilot test line, which is accelerating the process of capacity climbing. In terms of TOPCON, the company launched technology research and development based on 210 size in 2020, with a mass production conversion efficiency of 24.10%, which will accelerate the construction of 1gwtopcon pilot test line, actively grasp the historical node of battery technology transformation and maintain the leading position in the industry.
Performance forecast: the company is expected to realize a net profit attributable to the parent company of RMB 8.749/14.619/15.811 billion from 2021 to 2023, corresponding to 23.1/13.9/12.8 times of PE valuation, and maintain the “overweight” rating.
Risk tip: the industry demand is less than expected, and the company’s production capacity is not as expected.
