Shuangliang Eco-Energy Systems Co.Ltd(600481) (600481)
Monocrystalline silicon business won another big order, and the production capacity was recognized by the downstream
The company recently announced the announcement on signing major sales contracts by wholly-owned subsidiaries. From 2022 to 2024, it sold 22800 tons of single crystal square ingots to Changzhou Shunfeng Cecep Solar Energy Co.Ltd(000591) Technology Co., Ltd., 9720 tons of single crystal silicon square rods to Jiangsu Xinchao photovoltaic energy development Co., Ltd. and 300 million silicon wafers to Funing Atlas Photovoltaic Technology Co., Ltd. According to the average price of pvinfolink’s latest monocrystalline silicon wafer, the three contracts amount to 7.197 billion yuan (including tax, the same below), 3.087 billion yuan and 1.86 billion yuan respectively. The total contract amount exceeds 12 billion yuan.
Since October, the company has announced monocrystalline silicon business contracts with Changzhou Shunfeng Cecep Solar Energy Co.Ltd(000591) Technology Co., Ltd., Jiangsu Xinchao photovoltaic energy development Co., Ltd., Funing atlas Photovoltaic Technology Co., Ltd., Jiangsu Longheng new energy Co., Ltd., Shanghai Aiko Solar Energy Co.Ltd(600732) and Jiangsu Runyang Yueda Photovoltaic Technology Co., Ltd. at the same time, the company has signed monocrystalline silicon business contracts with Trina Solar Co.Ltd(688599) Chint new energy’s large-size silicon wafer products are in the pilot stage. The company’s trial production capacity of monocrystalline silicon has been recognized by more and more downstream customers, and the scale of orders on hand may continue to increase.
The price reduction is expected to stimulate downstream demand, and large-scale production capacity is still popular
Since this year, the rise in the price of photovoltaic raw materials has restrained downstream demand, especially for non subsidized photovoltaic power plants. From January to October this year, the newly installed capacity of PV in China was about 29gw, including about 13.6gw for household use. From January to October 2020, the newly installed capacity of PV in China was about 22gw, including about 6.6gw for household use. It can be seen that the year-on-year increase of new installed capacity in China from January to October this year is mainly supported by subsidized household photovoltaic. With the landing of silicon production capacity, the price of upstream raw materials is expected to fall and stabilize, and the downstream installed demand may increase.
In addition, according to CPIA, China’s silicon wafer production capacity will be 240gw in 2020, but the large-size silicon wafer market above 182 accounts for less than 5%. With the increasing market demand for large-size silicon wafers, the production capacity of small-size silicon wafers before 2020 will be accelerated. From the company’s own situation, five companies locked in more than 4.6 billion large-size silicon wafers and more than 30000 tons of large-size monocrystalline silicon through long-term single contract, which fully shows that the production capacity of advanced silicon wafers is still popular.
There is no worry about the supply of raw materials, long sales orders are locked, the company has obvious advantages in the shuffle stage, and a successful breakthrough can be expected
With the technological change of photovoltaic industry, the decline of raw material prices and the elimination of backward silicon production capacity, the silicon link may usher in a new round of reshuffle. At this stage, we believe that the company has three advantages:
1. Go light. The company’s production capacity is large-size silicon wafer production capacity, and there is no inventory of small-size silicon wafers, and there is no pressure such as asset impairment.
2. Silicon material supply worry free. As the leader of polysilicon equipment, the company has a natural cooperative relationship with silicon material enterprises, and has certain advantages in silicon material supply. At present, the company has locked in the supply of more than 160000 tons of silicon material.
3. The production capacity is recognized by many downstream parties, and the sales long order is locked to ensure the performance. From the single crystal furnace equipment contract announced by the company, the total procurement of single crystal furnace exceeds 3 billion yuan, corresponding to the production capacity of more than 20GW single crystal silicon, and the production capacity is worry free. At the same time, the company has obtained orders from multiple customers, and the performance guarantee is sufficient.
Based on the above, we are optimistic about the long-term development of the company.
Investment advice
It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 288 million, RMB 589 million and RMB 940 million respectively, corresponding to the current PE of 61x / 30x / 19x respectively, which will continue to be recommended.
Risk statement
Macroeconomic downturn and market demand decline; The price of raw materials fluctuates greatly; Risk of policy change in photovoltaic industry, etc.
