\u3000\u3000 Trina Solar Co.Ltd(688599) (688599)
Event: the company released the performance forecast for 2021. The company expects to realize the net profit attributable to the parent company of 1.72-2.05 billion yuan in 2021, an increase of 39.9-66.8%, of which the net profit attributable to the parent company of 564-894 million yuan in 2021q4, an increase of 41.7-124.6% and a ring increase of 25.1-98.2%. In view of the increase in the price of 2021q4 components, the decline in the price of silicon wafers and the household installed capacity exceeding expectations, we expect the company’s performance to be above the median, so the net profit attributable to the parent company in 2021 will be RMB 1.85-1.9 billion, slightly exceeding the market expectation.
In 2021q4, the single watt profit increased month on month, and it is optimistic that the volume and profit will rise in 2022. We expect the company to ship about 25gw of components in 2021, with a same increase of 56%, of which about 8GW will be shipped in 2021q4, with a same increase of 31% and a ring increase of 27%. While the silicon price remained high, the profit per watt of the company’s components exceeded the market expectation. The reasons were as follows: 1) the price of silicon wafer began to decline from mid November 2021, making profits downstream; 2) The proportion of large-scale enterprises increased and the profit structure improved. We expect that by the end of 2021, the company will have battery and module capacity of 35gw and 50gw, with a year-on-year increase of + 180% and + 125%, and the integrated proportion of battery and module will increase to 70%. To expand production and accelerate the integrated layout, we expect the company to ship 40-50gw of components in 2022, and the market share will increase to about 18%. With the downward price of silicon material, we are optimistic about the double rise of component volume and profit in 2022.
Distributed photovoltaic system has grown brightly and become a new driving force for performance. We expect the company to ship 1.8-2gw distributed systems in 2021, of which 2021q4 is about 0.5-0.6gw. The promotion of 2022q1 distributed photovoltaic in China is in full swing. We expect that it will reach 45gw + (30GW + for household use and 15gw + for Industry and Commerce) in 2022. The company has a forward-looking layout and fully benefited. We expect that the company will ship 4gw distributed systems in 2022, with great growth potential.
Tracking the short-term pressure on the support and the profit reversal in 2022. We expect the company’s tracking support shipment to be 1.8-2gw in 2021, including about 0.6-0.8gw in 2021q4. However, due to the rapid rise in steel prices, the volume is not profitable and is at the bottom of profit. We expect the demand volume + tracking support penetration to increase in 2022. We expect the shipment to increase to 4gw in 2022 and the profit will be repaired.
Profit forecast and investment rating: Based on the rising cost and intensified competition, we lowered the company’s profit in 2021. At the same time, based on the higher than expected photovoltaic demand in 2022, the rapid growth of household distributed photovoltaic system and the strength of the company’s distributed photovoltaic system, we raised the profit forecast in 2022 and 2023. We expect the net profit attributable to the parent company to be 1.91/38.1/5.15 billion from 2021 to 2023, (the former value is RMB 2.072/35.67/4.533 billion), with a same increase of 55% / 100% / 35%, corresponding to PE of 85.85/42.97/31.74 times. We gave the company 45 times PE in 2022, corresponding to the target price of 82.8 yuan, maintaining the “buy” rating.
Risk tips: market competition intensifies, policies are less than expected, etc.
