\u3000\u3 Guocheng Mining Co.Ltd(000688) 303 Xinjiang Daqo New Energy Co.Ltd(688303) )
Event:
The company released its annual report for 2021. The annual operating income was 13.2 billion yuan, a year-on-year increase of 23.8%; The net profit attributable to shareholders of listed companies was 5.724 billion yuan, a year-on-year increase of 448.56%; The basic earnings per share is 3.25 yuan / share; The weighted average return on net assets was 55.94%, an increase of 29.87 percentage points year-on-year.
Comments:
Silicon material supply and demand is tight, and the company’s performance in 2021 is excellent. In 2021, the company’s operating revenue and net profit increased significantly, which mainly benefited from the expansion and speed-up of downstream silicon wafer enterprises, while the supply of new capacity in the silicon material market was limited, and the silicon material price rose sharply throughout the year. Specific split data:
The company’s output of high-purity polysilicon was 8658660 tons, a year-on-year increase of 12.03%; The sales volume was 7535603 tons, a year-on-year increase of 0.73%. The 35000 ton polycrystalline silicon project in phase III B of the company was completed ahead of schedule in December 2021, and the construction and production climbing progress was better than expected.
The average sales price of silicon material of the company was 143.18 yuan / kg, with a year-on-year increase of 131.20%, and the product price showed a quarterly upward trend, reaching the high price of 216.87 yuan / kg in 21q4 in recent years. The average cost of silicon material of the company is 49.32 yuan / kg, with a year-on-year increase of 19.19%, which is mainly due to the significant rise in the price of silicon powder in the second half of 2021.
The gross profit margin of silicon material sales of the company was 65.56%, with a year-on-year increase of 32.38%; The net sales interest rate was 52.84%, up 30.47 percentage points year-on-year, reaching a high in recent years.
Strengthen the R & D investment of n-type silicon material to realize product upgrading, cost reduction and efficiency increase. The conversion efficiency of perc battery is approaching the limit, and the requirements for further cost reduction of battery are increasing. The localization of equipment, the improvement of yield and other factors promote the rapid development of n-type batteries such as hjt and TOPCON. Referring to the GW scale TOPCON battery production line of downstream Jingke energy, Trina Solar Co.Ltd(688599) and other enterprises, it is expected that the demand for upstream n-type silicon material and n-type silicon wafer will increase rapidly. In 2021, the company continued to increase investment in single crystal material and n-type silicon material products, with a cumulative R & D investment of 375 million yuan. The company has accumulated rich experience in distillation coupling, cold hydrogenation, trichlorosilane reduction, tail gas treatment, product crushing and screening, etc., optimizing the structure of reaction equipment, improving conversion efficiency, reducing energy consumption and waste gas emission.
The company plans to issue non-public shares to expand production capacity and consolidate its market position. In January 2022, the company announced that it plans to raise no more than 11 billion yuan through non-public offering of shares. After deducting the issuance expenses, it will be used for the project with an annual output of 100000 tons of high-purity silicon-based materials and supplement working capital. The project is implemented by the wholly-owned subsidiary Inner Mongolia Daquan in Baotou, Inner Mongolia, to meet the needs of downstream Longi Green Energy Technology Co.Ltd(601012) , Ja Solar Technology Co.Ltd(002459) , Wuxi Shangji Automation Co.Ltd(603185) and other silicon wafer manufacturers in Inner Mongolia and surrounding areas. The implementation of the project is conducive to increasing the supply of n-type silicon material, improving the company’s market share and consolidating the company’s leading industry position.
There is a strong demand for photovoltaic installation. Pay attention to the progress of silicon material expansion and the changes of supply and demand. In 2022, policies such as the construction of China’s scenery base and the promotion of roof photovoltaic in the whole county will promote the upward demand for installed capacity, while the high geopolitics and energy prices in overseas markets will accelerate the increase of the proportion of installed capacity of renewable energy. According to the prediction of the photovoltaic industry association, the new PV installed capacity in China is expected to reach 75-90gw in 2022, and the global PV installed capacity is expected to reach 195240gw. The global clean energy transformation will strongly support the demand for silicon materials. On the supply side, in 2022, Tongwei Co.Ltd(600438) , Xinjiang Daquan, poly GCL, Xinte energy, Oriental hope, Asia silicon and other enterprises will put in new production capacity, which is expected to form a cumulative production capacity of 1078000 tons / year by the end of the year. At the same time, considering the capacity launch plans of Qinghai Lihao, Ningxia Baofeng Energy Group Co.Ltd(600989) , Xinjiang JINGNUO, Xinyi Glass and other new entrants, it is expected that the tight situation of silicon material supply and demand will be gradually reversed.
For the first time, give the company an “overweight” investment rating. It is estimated that the company’s fully diluted EPS in 2022 and 2023 will be 5.81 yuan / share and 4.64 yuan / share respectively. Calculated according to the closing price of 58.80 yuan / share on March 17, the corresponding PE will be 10.12 and 12.66 times respectively. Considering that the company continued to promote the cost reduction and efficiency increase of silicon material production, expanded production capacity, increased market share, and arranged n-type silicon material in advance to meet the needs of the next generation of batteries, the company was in a leading position in the industry and was covered for the first time, so the company was rated as “overweight” investment.
Risk warning: the global installed demand is less than the expected risk; The production capacity of silicon material increases, and the product price is at downward risk.
