\u3000\u3000 Tongwei Co.Ltd(600438) (600438)
Events
On January 7, 2022, the company issued the announcement of performance increase in 2021. It is expected that the net profit attributable to the parent company will reach 8-8.5 billion yuan in 2021, an increase of 4.392-4.892 billion yuan over the same period in 2020, a year-on-year increase of 122% – 136%; The net profit deducted from non parent company was 8-8.5 billion yuan, an increase of 5.591-6.091 billion yuan over the same period in 2020, a year-on-year increase of 232% – 253%, which was basically in line with previous expectations. According to the performance forecast, Q4 company will realize the net profit attributable to the parent company of RMB 2.055-2.555 billion in 2021, with a month on month decrease of 14-31%.
Key investment points
Silicon material maintains a tight balance and profitability remains high
In 2021, silicon material became the most scarce link in the industry. The company’s silicon material production and sales increased significantly, and its profit increased rapidly. In terms of shipment, we expect that the annual shipment in 2021 will be about 100000 tons, and the capacity utilization rate will exceed 100%, of which Q4 will ship about 27000 tons. In terms of price, Q4 polysilicon price ushered in a new round of rise in 2021, with the highest price exceeding 260 yuan / kg. We expect the company’s annual silicon material tax inclusive price to be about 193 yuan / kg, of which Q4 price is about 240 yuan / kg. In terms of cost, we estimate that the average tax inclusive price of Q4 industrial silicon is 34.56 yuan / kg, the full cost of Q4 is about 70 yuan / kg, and the net profit per ton is about 100000 yuan / ton.
With rapid expansion and cost advantages, silicon material performance will maintain high growth
The company’s silicon material production capacity of 101000 tons in Leshan phase II and Baoshan phase I has been put into operation and climbing in Q4 of 2021. At present, the nominal production capacity has exceeded 180000 tons, significantly ahead of the industry. In addition, the company’s newly expanded capacity of 50000 tons in Baoshan phase II and 100000 tons in Leshan phase III will be put into operation by the end of 2022. At that time, the company’s nominal capacity will reach 330000 tons, of which the effective capacity is expected to exceed 230000 tons. Although there are many new capacity of silicon materials planned to be put into operation in 2022, due to the factors of production expansion cycle and capacity climbing, it is difficult for new projects to form an effective capacity supply in 2022. Therefore, it is expected that silicon materials will maintain a tight balance, and the annual price is about 170 yuan / kg. Considering the rapid pace of production expansion and strong cost control ability of the company, the silicon material performance is expected to maintain high growth in 2022.
The improvement of battery profit has strong certainty, benefiting from the layout of large size + new technology
In 2021, due to the shortage of polysilicon, the profitability of the battery link is at the bottom. The company ensures the supply of silicon wafers through cost control, self supplied silicon materials and outsourcing processing. It is expected that the battery shipment in 2021 will be about 30GW, of which Q4 will be about 8GW, and the profitability of Q4 battery will be repaired month on month. With the gradual release of polysilicon production capacity in 2022, the operating rate of battery link rebounds, the superimposed cost improves, and the company’s battery profitability will be further repaired. In addition, the company focuses on the expansion of 210 large-scale high-quality production capacity. It is expected that 210 of the total 55gw battery capacity will reach 35gw by the end of 2022. Superimposed with the dividends brought by the company’s new technologies such as hjt and TOPCON, the profitability of the company’s battery business will continue to improve.
Profit forecast and valuation
The company’s silicon material expansion pace is fast and the cost advantage is significant. It is expected to achieve high performance growth under the tight balance of silicon materials in 2022. In addition, after the release of silicon material capacity, the company’s battery performance and profitability are highly uncertain, and is expected to benefit from large-size and new technology dividends. According to the performance forecast, we maintain the previous profit forecast. It is expected that the company will realize a net profit attributable to the parent company of RMB 8.2/13/13.9 billion from 2021 to 2023, corresponding to 23 / 15 / 14 times of the current market value PE, maintaining the “buy” rating.
Risk tips
The new installed capacity is less than expected, the oversupply competition is intensified, and the production capacity is less than expected.
