\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 93 Jolywood (Suzhou) Sunwatt Co.Ltd(300393) )
Event overview
The company announced on March 15 that the company signed the strategic cooperation and investment agreement with Taiyuan government and Gujiao government to invest in the project with an annual output of 200000 tons of industrial silicon and 100000 tons of high-purity polycrystalline silicon. In the first phase, it is planned to invest in the project of 200000 tons of industrial silicon and 10000 tons of high-purity polycrystalline silicon; The phase II project is planned to be invested and constructed with an annual output of 90000 tons of polysilicon. The total investment period is expected to be 5 years, and the total investment amount is about 14 billion yuan. Among them, the investment amount of phase I project is about 4.3 billion yuan, which is expected to be invested and constructed in 22 years and put into operation in 24 years. The company / designated subsidiary and the fund established by Taiyuan municipal government jointly invest and establish a project company in Gujiao City as the implementation subject. The company / subsidiary plans to hold 51% and the fund established by Taiyuan municipal government holds 49%.
Core view
Improve the upstream layout of the industrial chain and resist industry fluctuations. Due to the mismatch between supply and demand, industrial silicon and polysilicon, as the upstream of the photovoltaic industry, have continued to rise in the past two years, which has also affected the company’s battery and module business, and the profitability has decreased significantly. The company’s layout of industrial silicon and polycrystalline silicon will effectively ensure the supply of battery raw material silicon wafer and enhance the company’s overall resistance to the risk of industrial cycle fluctuation. At the same time, we believe that the company’s industrial silicon and polysilicon projects can dynamically track technological changes and choose the best layout.
Integrate upstream and downstream resources to achieve coordinated development. At present, the company has laid out three major businesses: photovoltaic backplane, cells and components and household photovoltaic power station. The implementation of industrial silicon and polysilicon projects will make up for the lack of the company’s upstream photovoltaic industrial chain. In the future, the company’s businesses will develop in coordination, strengthen the coordination of upstream and downstream resources, and form a collaborative advantage of industrial chain integration.
The production line is climbing smoothly, and the volume of battery module business is expected to rise together. The company laid out TOPCON batteries earlier, and popaid technology applied generation 2.0 production process to reduce process steps to 9 steps. The maximum mass production efficiency can reach 24.5% and the yield can reach more than 97%. The company has an existing production capacity of 2.1gw and a new production capacity of 1.5gw, which is in the process of climbing. Shanxi has newly built 16GW production line, of which 8GW in phase I is in the stage of equipment installation, and it is expected to achieve 6Gw production capacity in 2022. The company expects to have a battery production capacity of about 20GW in the next 2-3 years. Affected by the high price of raw materials, the profitability of the company’s battery and module business has decreased significantly in 21 years. We expect that with the gradual decline of the price of raw materials, the profitability of the company’s battery and module business in 22 years will be repaired, and the volume and profit of the company’s battery and module business are expected to rise in 22 years.
Under the promotion mode of the whole county, the distributed photovoltaic will develop rapidly, and the company’s household business will fully benefit. In 2021, the whole county will promote the release of policies, and the central government’s active policy layout will promote the rapid growth of distributed photovoltaic market. According to the data of the national energy administration, the newly installed capacity of household photovoltaic in 2021 was 21.6gw, accounting for about 39% of the newly installed capacity in China, with a year-on-year increase of 113%. Since 2017, the company has carried out household photovoltaic business, independently developed, established and improved five online management systems, and taken a number of measures to ensure payment collection and after-sales service. In the early stage, it mainly focuses on credit sales. After cooperation with central enterprises, it turns to EPC general contracting mode, which operates in a light asset mode, and provides EPC engineering services for photovoltaic power station for the joint venture Shanghai Yuanye. It is planned that the cumulative installed capacity will reach more than 7.2gw in five years of cooperation. We believe that under the background of the rapid development of household photovoltaic, the company will fully benefit. The company’s backplane business has developed steadily, with a backplane production capacity of 170 million square meters in 2021 and a corresponding installed capacity of 40gw. The company focuses on coated backplane. Under the background of PVDF price rise, coated backplane has obvious advantages, and its competitiveness and profitability continue to improve. We expect the company to return to the first place in the backplane industry in 21 years.
Investment advice
For the first time, give a “buy” rating. It is estimated that the operating revenue of the company from 2021 to 2023 will be 6.544 billion yuan, 15.080 billion yuan and 22.551 billion yuan respectively, with a year-on-year increase of 28.7%, 130.4% and 49.5% respectively; The net profit attributable to the parent company was -239 million yuan, 615 million yuan and 1.202 billion yuan respectively, with a year-on-year increase of – 346.9%, 357.6% and 95.5% respectively. The current share price corresponds to 51 and 26 times of PE in 22-23 years respectively.
Risk tips
Policy fluctuation risk of photovoltaic industry; The risk of intensified market competition.
