\u3000\u3 Guocheng Mining Co.Ltd(000688) 303 Xinjiang Daqo New Energy Co.Ltd(688303) )
Event: the company released the annual report of 2021. The company achieved a revenue of 10.832 billion yuan, a year-on-year increase of 132.23%, and a net profit attributable to the parent company of 5.724 billion yuan, a year-on-year increase of 448.56%; Among them, 2021q4 achieved a revenue of 2.527 billion yuan in a single quarter, with a year-on-year increase of 51.52%, and the net profit attributable to the parent company was 1.251 billion yuan, with a year-on-year increase of 128.95%. It is proposed to pay 6 yuan for every 10 shares. The performance was in line with expectations, mainly benefiting from the shortage of silicon market supply, and the company achieved both volume and profit. The quarter on quarter decline in Q4 was mainly due to the inventory adjustment and lower purchase intention of downstream silicon wafer manufacturers in December. With the continuous improvement of photovoltaic demand in 2022, according to the company’s announcement, the company expects to realize the sales of 3700038000 tons of polysilicon materials in 22q1, with a year-on-year increase of 72.33% – 76.98%.
In 2021, the short supply of silicon material led to a sharp rise in price, and the company realized a simultaneous rise in volume and profit. Overall in 2021
The demand of photovoltaic market continues to grow. The production expansion and speed-up of downstream monocrystalline silicon enterprises and the demand for high-quality polycrystalline silicon have increased significantly. The shortage of supply makes the price rise continuously. Volume: in 2021, the company’s existing production line achieved full capacity production, with polysilicon output of 86600 tons, a year-on-year increase of + 12.03%, accounting for 17.75% of China’s polysilicon output. The output is in the first echelon of the industry, with sales volume of 75400 tons, a year-on-year increase of + 0.7%. Profit: in 2021, the gross profit margin of polycrystalline silicon of the company was as high as 65.65%, with a year-on-year increase of 32.38 PCTs. The net profit per ton is expected to be 75500 yuan / ton, with a year-on-year increase of more than 4 times, of which the net profit per ton of Q4 is 107000 yuan / ton. At present, according to the data of silicon industry branch, the price of 22q1 silicon material is still at a high level, and the net profit per ton of the company is expected to remain at a high level this year.
Strengthen the layout of silicon material industry and continuously optimize the product structure. At present, 35000 tons of the company’s 4B project climbed smoothly, and the progress exceeded market expectations. By the end of the first quarter, the company’s actual production capacity had reached 120000130000 tons. At the end of 2021, the company signed a cooperation framework with Baotou municipal government and plans to invest 33.25 billion yuan to build 300000 t / a high-purity industrial silicon project + 200000 t / a silicone project + 200000 t / a high-purity polysilicon project + 21000 T / a semiconductor polysilicon project. The first phase of the project “100000 t / a high-purity polysilicon + 1000 t / a semiconductor polysilicon” is expected to start construction in March 2022 and be completed and put into operation in Q2 2023. After the completion of the project, the company is expected to have a production capacity of 300000 tons of industrial silicon, 320000 tons of photovoltaic polysilicon, 200000 tons of silicone and 21000 tons of semiconductor silicon. While continuing to scale photovoltaic silicon, the company will expand the layout of industrial silicon, silicone and semiconductor silicon, enrich the product structure and build a multi silicon material platform, which is expected to improve the profitability and stabilize the leading position in the silicon material industry.
R & D continues to invest, and n-type materials are expected to be in large quantities. The company continued to invest in R & D, with an investment of 375 million yuan in 2021, a year-on-year increase of + 690%, mainly for R & D of n-type materials. At present, the company’s higher quality n-type materials have been supplied in batches and have been verified by downstream mainstream customers. It is expected that with the rise of a new generation of n-type battery chips, the company is expected to make deep profits.
Investment suggestion: we expect the company to achieve revenue of 20.8/17/19.4 billion yuan from 2022 to 2024, and the net profit attributable to the parent company is 11.6/86/8.4 billion yuan respectively, corresponding to PE multiple of 10x / 13X / 14x. The company is a leading enterprise of photovoltaic silicon materials. At present, the valuation is still low. It is expected to benefit from the high prosperity of photovoltaic industry and the high gross profit of silicon materials, and maintain the “recommended” rating.
Risk tip: the demand for photovoltaic installation is less than expected, and the price of polysilicon fluctuates
