\u3000\u30 Xuchang Ketop Testing Research Institute Co.Ltd(003008) 61 Yangling Metron New Material Co.Ltd(300861) )
Global diamond thread leader, focusing on technology improvement
Yangling Meichang new material focuses on the field of silicon wafer cutting. At present, the market share of diamond wire is more than 50%. In recent years, the company has expanded its production capacity rapidly and advanced technology has brought higher gross profit margin. At the same time, the upstream and downstream extension will further reduce the company’s cost. It is expected that the company will continue to maintain high revenue growth while its profitability is stable.
Thin line brings excess demand in the industry, and the space for price decline is limited
Demand: at present, the prosperity of photovoltaic is high. Under optimistic circumstances, the average annual new installed capacity of global photovoltaic will reach 240330gw from 2022 to 2025. The demand of diamond wire for silicon wafer cutting in 2022 and 2023 is 130 million km and 160 million km respectively. Supply: according to the planned production capacity of listed diamond line enterprises, the effective production capacity of the industry has increased by more than 100% compared with 2021. Judging from the rhythm of capacity release, most of the capacity will be put into operation before the middle of 2022. Price: the recent price decline of diamond line has slowed down. Due to the steep cost curve of the industry and the large gap between the gross profit margin of tail enterprises and the leading enterprises, the tail manufacturers will lose the power to expand production after the price drops. Therefore, we believe that the price range in the future is limited.
Meichang leads the industrial chain to reduce costs, and it is difficult to shake the leading position of technological innovation
The company’s production expansion speed is fast: the production capacity has increased from 35 million kilometers by the end of 2020 to 70 million kilometers by the end of 2021. It is estimated that by the end of 2022, the production capacity will reach 125 million km. The gross profit margin has always been significantly ahead of the industry average: it mainly depends on the extension of the industrial chain and the cost reduction of electroplating links. From the perspective of industrial chain extension: it mainly depends on the self supply of bus and the cooperative research and development of wire rod and yellow wire (upstream of bus); From the aspect of electroplating: it mainly depends on the multiple utilization of I-wheel, the use of multi wire machine and low unit consumption of bus and diamond. The leading position is stable: at present, no matter whether the bus material changes in the future, the company has always been in the forefront of the industry with obvious process advantages.
Profit forecast
We predict that the total revenue of the company from 2021 to 2023 will be 1.806 billion yuan, 2.562 billion yuan and 3.296 billion yuan, with a year-on-year increase of 50%, 42% and 29% respectively. The corresponding net profit attributable to the parent company will be 753 million yuan, 1.089 billion yuan and 1.366 billion yuan, with a year-on-year increase of 67%, 45% and 25% respectively. The EPS will be 1.88, 2.72 and 3.41 yuan respectively. The corresponding PE of the current stock price will be 37, 25 and 20 times respectively.
Risk tips
The downstream photovoltaic demand is less than expected, the competition pattern of diamond line industry worsens, the expansion of diamond line does not meet expectations, and the price of bulk commodities rises.
