\u3000\u3000 Yangling Metron New Material Co.Ltd(300861) (300861)
Events
On the evening of January 11, Yangling Metron New Material Co.Ltd(300861) released the performance forecast for 2021: it is estimated that the net profit attributable to the parent company will be RMB 684 million-836 million in 2021, with a year-on-year increase of 52.11% – 85.91%. It is estimated that the non recurring profit and loss is about 80 million yuan.
Key investment points
The performance forecast is in line with expectations and continues to grow at a high speed
The company expects to realize the net profit attributable to the parent company of RMB 684 million-836 million in 2021, with a year-on-year increase of 52.11% – 85.91%, corresponding to the net profit attributable to the parent company of RMB 133 million-285 million in 2021q4, with a year-on-year increase of 6.3% – 128.0%. Due to the wide range of performance forecast guidelines, the company expects to achieve a net profit of 760 million yuan in 2021, an increase of 68.1% and a ring increase of 13.8%. The performance was in line with expectations. Considering that the silicon material price restrained the downstream demand in the fourth quarter and some silicon wafer manufacturers reduced the operating rate, the company’s profits continued to grow rapidly, reflecting the company’s stable profitability.
Photovoltaic diamond line is the leader, industrial extension and construction of moat
The company is a leading enterprise of photovoltaic diamond line. In the first three quarters of 2021, the company achieved a revenue of 1.271 billion yuan (YoY + 45.9%) and a net profit attributable to the parent company of 551 million yuan (YoY + 69.73%), of which the sales volume of diamond line is 30.86 million km, accounting for more than 50% of the market.
The profitability of the company has been significantly higher than that of the same industry. The gross profit margin in the first three quarters of 2021 was 57%, mainly due to 1. The company actively integrated the upstream industrial chain: since 2018, the company has strategically cooperated with VAI to develop wire rods and yellow wires for the production of diamond lines, ensuring the supply of raw materials; After that, we studied the yellow wire drawing bus technology with baomeisheng, which realized the resource integration of the upstream industrial chain and greatly reduced the bus cost. In January 2022, the company announced that it planned to invest abroad with its own funds to establish Shaanxi Meichang diamond material technology Co., Ltd. to deepen the research and development of diamond powder as an important raw material. 2. As the downstream companies need to involve the commissioning of cutting equipment and the running in of cutting tools, the scale effect is obvious. The downstream enterprises tend to purchase diamond lines in large quantities, and the scale effect advantage of the company is obvious. 3. The company has formed a stable strategic cooperative relationship with most downstream photovoltaic crystalline silicon leading enterprises.
The price decline of diamond line slows down, and the thin line increases the demand for line consumption
Vajra line has limited room for price decline. The price of diamond thread has decreased greatly in the past few years, but since October last year, the price has gradually stabilized and the decline has slowed down. At present, diamond wires account for about 2% of the cost of silicon wafers. There is no demand for continuous decline in the price of diamond wires in the downstream. More demand lies in the improvement of quality and wire diameter. It is expected that there is limited room for price decline in the future.
Thin lines increase the demand for line consumption. Due to the high price of silicon material, the industry is developing rapidly. At present, the diameter of mainstream products in the industry is 40 μ m-43 μ M, and gradually to 38 μ M penetration. As the diameter of diamond wire becomes finer, the smaller the diamond particles attached to its bus, the smaller its cutting capacity. Therefore, fine linearization means more wire consumption. Taking M6 silicon wafer as an example, it is estimated that the line consumption of line 38 is nearly 50% higher than that of line 45. It is expected that the demand for diamond line in the future is expected to further increase on the basis of the growth of photovoltaic installed capacity.
Capacity expansion maintains scale effect and the leading position is consolidated
As of September 2021, the company’s annual diamond production capacity has exceeded 7000 km, which is more than 100% higher than that of last year. We expect that the company’s production capacity will continue to expand in the future and the market share is expected to further increase.
Profit forecast
We are optimistic that the demand for photovoltaic installation will be gradually released during the decline of silicon material price, driving the rapid development of diamond line market. It is predicted that the company’s revenue from 2021 to 2023 will be RMB 1.781 billion, RMB 2.902 billion and RMB 3.668 billion respectively, EPS will be RMB 1.87 million, RMB 2.79 million and RMB 3.41 respectively, and the current share price corresponding to PE is 36, 24 and 20 times respectively, giving it a “recommended” investment rating.
Risk tips
The PV installation did not meet the expectations, the expansion of diamond line did not meet the expectations, the price of diamond line fell, and the price of bulk commodities increased.
