\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 481 Shuangliang Eco-Energy Systems Co.Ltd(600481) )
Investment summary
The global photovoltaic market will grow rapidly driven by the goal of carbon neutrality. We expect the global PV installed capacity to increase by 230gw in 2022, with a year-on-year increase of more than 40%. According to PV InfoLink, the global PV installed capacity will increase to 352gw in 25 years. China is the world’s largest market, with an estimated market share of 36.5% in 22 years. China will also flourish driven by the dual carbon goal. We expect China’s new installed capacity to be 84gw in 2022. According to PV InfoLink data, China’s new installed capacity of PV will increase to 125gw in 2025.
The mismatch between supply and demand is the core logic of this round of silicon wafer price rise: through the price cycle of silicon wafer, we found that the mismatch between supply and demand caused by the long cycle of silicon capacity expansion is the fundamental reason for the situation of “embracing silicon as the king” many times in history. This is also the case with the current round of silicon wafer price increase starting in the middle of 2020. Silicon material is in short supply due to the epidemic situation, production line maintenance, long production expansion cycle and other reasons. At the same time, the rush for loading and policy driven demand is strong. The mismatch between supply and demand causes the price of silicon material to rise all the way, from about 70 yuan / kg to about 240 yuan / kg at present. The continuous high downstream demand has led to the significant expansion of silicon wafer production in this round.
Subject to the supply of silicon materials, there will be no significant surplus of silicon wafers in 22 years. We expect the effective supply of large silicon wafers to be 238gw in 22 years, which is still in short supply. It is estimated that the silicon material production capacity will be 858000 tons in 22 years, and more than 250000 tons will be released in the fourth quarter. Based on the long production expansion cycle and the fact that the production capacity release often lags behind the expected time, we expect that the silicon material price reduction will not be seen until Q1 in 23 years. Subject to the silicon material capacity, the annual output of silicon wafer 22 is expected to be 311gw. In the past 22 years, the newly installed capacity of PV was 230gw. Considering the capacity ratio of 1:1.2, the demand for corresponding components was 276gw. Due to factors such as capacity climbing cycle and inventory, the output of silicon wafers can basically meet the downstream demand. The trend of large-scale silicon wafers is determined. We expect the effective supply of large silicon wafers to be 238gw in 22 years. According to PV InfoLink data, the production capacity of downstream large-scale batteries has reached 266gw by the end of 21. The supply of large silicon wafers is still in short supply and the profit is guaranteed.
There are three core competitive advantages of Shuangliang silicon wafer business: 1) the company has the advantage of late development. The production line of the company uses 1600 furnace single crystal furnace to produce 182 / 210 large-size single crystal silicon wafer, which is in line with the current and future technical trend, with lower cost, stronger competitiveness and high overall efficiency. 2) Silicon material is stably supplied. As the leading company of polysilicon reduction furnace, the company is a supplier to each other with major silicon material enterprises, and bilateral cooperation ensures the reliable supply of silicon materials. At present, the total amount of silicon material locked in the contract is about 160160 tons, with an average of 32000 tons per year, and the corresponding installed capacity is about 11.73 GW. 3) The strength of silicon wafer has been recognized by mainstream downstream customers, with sufficient orders and great profit elasticity. At present, the company has signed long order sales contracts with customers including Tongwei, Atlas, aixu, Trina Solar Co.Ltd(688599) etc. the strength of silicon wafer has been recognized by major downstream customers. In 2022, there are sufficient orders and great profit elasticity.
Polysilicon reduction furnace benefits from silicon material expansion and strong order demand. The expansion cycle of silicon material production is long. This round of mismatch between supply and demand has caused significant price fluctuations, and the expansion of silicon material production continues to advance. Since 21 years, the polysilicon production has increased by 2.09 million tons, which is expected to bring the demand for reduction furnace to more than 9.5 billion yuan. As the leader of polysilicon reduction furnace, the company accounts for more than 65% of the market, benefiting from the silicon material capacity expansion. Since the end of the 20th year, the cumulative amount of orders for reduction furnace has exceeded 5 billion yuan. The company’s reduction furnace products supply silicon material leading companies, such as Daquan, Tongwei, Xinte energy, Oriental hope, Asian silicon industry, etc. We believe that the company, as an industry leader, has strong bargaining power and benefits from the expansion of silicon production and the improvement of profitability. The company’s Bromine cooler, heat exchanger, air cooling system and other energy-saving and water-saving system equipment account for the first place in many fields. Benefiting from the dual carbon policy, the energy-saving and water-saving business has grown steadily. Its customers mainly include Qingdao Lihao, Xinte energy, Yunnan Tongwei, Kweichow Moutai Co.Ltd(600519) etc.
Profit forecast
It is estimated that the operating revenue of the company from 2022 to 2024 will be RMB 12.972 billion, 15.916 billion and 19.017 billion respectively, with a year-on-year increase of 238.7%, 22.7% and 19.5% respectively; The net profit attributable to the parent company was 923 million yuan, 1527 million yuan and 2.075 billion yuan respectively, with a year-on-year increase of 197.6%, 65.5% and 35.9% respectively. The current share price corresponds to 22, 18 and 13 times of PE from 2022 to 2024 respectively.
Risk tips
Silicon wafer capacity expansion is less than expected risk; Policy fluctuation risk of photovoltaic industry; The risk of intensified market competition.
