Tongwei Co.Ltd(600438) (600438)
Event: the company issued the announcement of performance pre increase in 2021. It is expected to realize the net profit attributable to the parent company of 8 ~ 8.5 billion yuan in 2021, with a year-on-year increase of 122% ~ 136%. It is expected to deduct the net profit not attributable to the parent company of 8 ~ 8.5 billion yuan, with a year-on-year increase of 232 ~ 253%, which is in line with the market expectation. According to the performance forecast, the company is expected to realize a net profit attributable to the parent company of RMB 2.055 ~ 2.555 billion in 2021q4, with a year-on-year increase of 647% ~ 829% and a month on month decrease of 14% ~ 31%.
Although the price of silicon material has entered the downward channel, the good demand and the expansion of silicon wafer production will effectively support the price. The leading position of silicon material of the company is stable, and the performance will maintain high growth in 2022. Although Tongwei Co.Ltd(600438) , poly GCL, Xinjiang Daqo New Energy Co.Ltd(688303) , Tbea Co.Ltd(600089) and other silicon material enterprises will release silicon material capacity in 2022 (it is expected that China’s silicon material capacity is expected to exceed 1 million tons by the end of 22), some capacity will not form effective capacity in 2022 under the background that the newly put into operation capacity still needs to climb; At the same time, the terminal demand continues to improve under the background of the decline in the price of the industrial chain. We maintain our judgment that the photovoltaic demand is expected to exceed 220gw in 2022. The strong demand for silicon material will play a certain supporting role in its price, and the possibility of rapid and sharp price decline is low. We judge that the average price of silicon material in 2022 is expected to remain above 160 yuan / kg.
The issuance of the company’s convertible bonds has been approved by the CSRC, of which RMB 5.6 billion will be used for the construction of polysilicon production capacity of Leshan phase II (50000 tons) and Baotou phase II (50000 tons). It is expected that the company’s silicon material production capacity will reach 330000 tons by the end of 22, and the company’s 2023 development plan (originally planned to achieve silicon material production capacity of 220000 ~ 290000 tons in 2023) will be completed ahead of schedule. Although the price of industrial silicon is still likely to remain above 20000 yuan / ton in 2022, the performance of silicon material business will remain high in 2022 under the background of the company’s excellent cost control ability.
The capacity of battery cells has expanded steadily, and the two technical routes go hand in hand. The 15gw battery project cooperated with Trina Solar Co.Ltd(688599) is progressing steadily. It is estimated that the total battery capacity of the company will exceed 55gw by the end of 22, of which 210 will exceed 35gw. In addition, based on the new 1GW heterojunction pilot test line, the company plans to carry out technical transformation and upgrading of some existing perc production lines and build a 1gwtopcon pilot test line. The joint research and development of the two technical routes is also conducive to maintaining the company’s leading edge in battery technology.
Maintain the “buy” rating: according to the company’s production expansion rhythm and judgment on the future silicon material price, we raised the company’s profit forecast. It is expected that the company will realize a net profit attributable to the parent company of RMB 8.304/147.31/16.080 billion in 21-23 years (an increase of 4% / 35% / 38%), corresponding to eps1 84 / 3.27/3.57 yuan. The current share price corresponds to 23 / 13 / 12 times of PE in 21-23 years. As the absolute leader of silicon materials, the company leads the industry in the pace of production expansion, the market share will be further improved in the future, and the layout of large-size batteries / modules is also expected to bring additional increment to the company’s profit and maintain the “buy” rating.
Risk tip: the installed capacity of photovoltaic industry is less than expected; The company’s production capacity and product sales are lower than expected; The intensity of overcapacity price war is higher than expected; The company’s technical route is wrong or capacity expansion cannot keep up with the trend.
