\u3000\u3 Guocheng Mining Co.Ltd(000688) 599 Trina Solar Co.Ltd(688599) )
Core view
The company is mainly engaged in photovoltaic modules and other businesses, and the module revenue accounts for 77%. The company is the world’s leading old brand module manufacturer. It began to produce and sell photovoltaic modules in 2004. It was listed on the New York Stock Exchange in 2006, privatized and delisted in 2017, and completed its listing back to a in 2020. The company’s component shipments in 2021 were 24.8gw, ranking second in the world. The company’s main business center is the overseas market. In 2021, China’s sales revenue accounted for 34% and foreign sales revenue accounted for 66%, of which Europe accounted for 22%, which is the overseas region with the highest revenue share. With the high prosperity of photovoltaic industry, integrated module manufacturers are expected to usher in both volume and profit. With the acceleration of global carbon neutralization process, global component shipments are expected to reach 270 / 337 / 410gw in 2022 / 23 / 24, an increase of more than 32% / 25% / 22%. At the same time, the trend of component link integration and head concentration is strengthened. In the next 1-2 years, with the implementation of new silicon production capacity to alleviate the supply bottleneck, the price of silicon is expected to open a downward channel. At the same time, the conflict between Russia and Ukraine breaks the balance between global natural gas supply and demand, resulting in a sharp rise in electricity prices in some countries and regions, and the profitability of photovoltaic module manufacturers in relevant markets will be expanded to a certain extent.
210 large-scale leading enterprises, ranking top in the world for many years. The company’s component shipments have always ranked among the top 5 in the world, ranking the top 3 in the industry for many years, and ranking the second in the world in 2021 and 2022q1. By the end of 2021, the company’s battery / module capacity was 35 / 50gw, of which the capacity of large-scale components accounted for more than 70%. It is expected to reach 50 / 65gw by the end of 2022, and the proportion of large-scale components will be further increased. The company continues to innovate iteratively and enrich its large-scale product line. In April 2022, it newly proposed 210 rectangular silicon wafers and component products to better meet the diversified needs of global customers.
Lay out new batteries and improve the layout of the industrial chain. The company has built 8GW of n-type TOPCON battery capacity in Suqian, Jiangsu, and plans to put it into operation in the second half of 2022. The progress of n-type production is relatively leading in the industry. At the same time, the company has always maintained the research and development of heterojunction technology route and completed the preparation of heterojunction battery laboratory, so as to lay a foundation for technical research in the next 3-5 years. The company laid out the tracking support business and distributed photovoltaic system business earlier. In 2021, the tracking support shipped about 1.8gw and the distributed system shipped about 2.1gw. With the development of photovoltaic industry, the relevant business segments of the company are expected to continue to grow.
Profit forecast and Valuation: the company will be in a period of rapid growth in production capacity and business scale in the next three years. It is expected that the company will realize external sales of 37 / 49 / 61gw of components in 202224, with a net profit attributable to the parent company of RMB 3.57/51.3/6.95 billion (a year-on-year growth rate of 97.8% / 43.6% / 35.5%), corresponding to the current dynamic PE of stock price of 32.3/22.5/16.6 times. Combined with absolute and relative valuation methods, we believe that the reasonable valuation range of the company is 62.8-72.4 yuan, which is 11% – 28% higher than the closing price on May 17, corresponding to 38.1-43.9 times of dynamic P / E ratio in 2022 and 26.6-30.6 times of dynamic P / E ratio in 2023. We give a “buy” rating for the first time.
Prompt: the PV demand is not up to expectations; Intensified market competition; The decline in raw material costs did not meet expectations; Battery technology iteration risk; The new production capacity fails to meet the expectation; Epidemic situation and trade friction risk.
