Suzhou Shijing Environmental Technology Co.Ltd(301030) (301030)
Key investment points
Leading pollution prevention and control equipment in photovoltaic process, deeply ploughing pan semiconductor and accelerating the expansion of terminal treatment. The company has been deeply engaged in Pan semiconductor pollution control for more than ten years. It is mainly engaged in process pollution prevention and control and end pollution control equipment. The downstream covers photovoltaic, semiconductor, automobile manufacturing, steel, cement, etc. at the same time, it provides environmental protection value-added products and services including remote online monitoring, custody operation and maintenance and third-party detection.
The red line of quality & Safety highlights the high barrier of process supporting equipment, and the new energy revolution promotes the demand for comprehensive supporting equipment of photovoltaic process to exceed 30 billion yuan in 2030. 1) Rigid demand for process pollution prevention and control equipment, strict control of product quality, production safety and pollution control, highlighting high barriers in the industry. 2) According to the policy objectives of various countries, we assume that the global photovoltaic power generation will account for 19% of the global power generation in 2030, and the compound growth rate of new photovoltaic installed capacity will reach 23% from 2021 to 2030. 3) We expect that the demand for supporting equipment of photovoltaic process will exceed 30 billion yuan in 2030. Assuming that the growth rate of photovoltaic cell capacity is consistent with the new installed capacity, we calculate that the global photovoltaic cell capacity is expected to reach 1664gw and the new output can reach 391gw in 2030. Considering the iteration cycle of photovoltaic process technology, we expect that the investment space for environmental protection equipment in photovoltaic cell process will reach 11 billion yuan and the investment space for comprehensive supporting equipment of photovoltaic cells will reach 32.3 billion yuan in 2030.
Technology & Brand & cost advantages to consolidate the leading position. We expect that in 2020, the revenue of the company’s photovoltaic process waste gas equipment will account for more than 75% of the market, with core advantages of 1) building a high share through long-term brand accumulation, more than 10 years of photovoltaic process project experience, experiencing several rounds of photovoltaic transformation cycles, forming strong risk resistance and adaptability, accumulating high-quality customer resources, and basically realizing the full coverage of core photovoltaic cell & module manufacturers in the downstream; 2) Strong technology R & D and obvious cost advantage. The self-developed LCR technology has a sell-off efficiency of 99%, 20% less investment cost than SCR sell-off technology, 30% ~ 50% lower operation cost and no secondary pollution; R & D efforts have been continuously strengthened, and the R & D cost rate and the proportion of R & D personnel have increased year by year.
Waste gas treatment turns to comprehensive supporting suppliers, and the value per unit volume is expected to improve and accelerate growth. With the accumulated market share created by the advantages of brand, technology and cost, the company is expected to copy the advantages of waste gas equipment to the comprehensive supporting system. In 2021, the company won the bid of RMB 200 million / RMB 310 million in succession, and the large single verification mode of comprehensive supporting equipment changed. The single GW volume value of the comprehensive supporting equipment system can reach 50-60 million, which has 5-11 times the investment of waste gas equipment.
The demand for ultra-low emission release in the non electricity field, and the cooperation between China and building materials has opened up a broad market. Strict energy efficiency constraints & inclusion in the carbon market will promote the cement industry to accelerate energy conservation and carbon reduction. In 2019, the company signed a strategic cooperation framework of RMB 7.6 billion with China building materials to open the ultra-low emission transformation market of cement of more than RMB 30 billion.
The integration of equipment operation improves cash flow and expands new areas of process. In the future, 1) the company will accelerate the expansion of third-party detection, custody operation and maintenance and other operation services, stabilize the mode and improve cash flow. 2) Continue to develop semiconductor, automobile manufacturing and other precision process markets, and accumulate more technologies.
Profit forecast and investment rating: the new energy revolution drives the expansion of photovoltaic production capacity and releases the demand for process governance. The company has established the leading position of photovoltaic process governance by virtue of its technology, brand and cost advantages, and the expansion of Integration & new fields helps its growth. We estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 75 / 120 / 186 million respectively, with a year-on-year increase of 22.29% / 60.10% / 55.11%, corresponding to 71, 45 and 29 times of PE, which is covered for the first time and given a “buy” rating.
Risk warning: technology and innovation risk, macroeconomic and market fluctuation risk, customer demand reduction risk, and the implementation of important framework agreements is not as expected.
