Focus of opinion
Investment suggestion
Skyworth laid out the rural household photovoltaic market in 2020, and the photovoltaic business developed rapidly in 2021, growing into an important leader of the household photovoltaic track. Using the segment valuation method, we raised Skyworth Group to outperform the industry, raising the target price by 168% to HK $6.94.
Reason
Long slope thick snow-household photovoltaic market: 1) the advantage of household photovoltaic energy attribute is obvious, and the construction has the advantages of low threshold for construction and flexible power generation; the roof of household photovoltaic has no owner differentiation and has the advantage of resources and development efficiency. 2) the current roof permeability of household photovoltaic is low, only 1.8%, and the long-term market space is broad. We expect that China's household photovoltaic cumulative installation is expected to reach 200GW CAGR 34% in 2021-2025. The installed space of household photovoltaic in China may be 1200-2200GW, corresponding to the market size of 500 billion-1 trillion yuan. 3) the roof distributed photovoltaic promotion policy of the whole county continues to land, and under the policy support, it accelerates the rapid growth of household photovoltaic industry.
Household photovoltaic new leader: 1) Photovoltaic track has become a cross-border popular choice in the home appliance industry. Photovoltaic is connected with the home appliance industry on the energy side, which involves large-scale manufacturing, large-scale retail and large-scale after-sales service. 2) Skyworth cross-border household photovoltaic, participate in household photovoltaic power station design, construction, acceptance, grid connection, operation and maintenance, and make use of its brand influence in rural areas to build core competitiveness in channel management, operation and maintenance. Skyworth photovoltaic business 1~3Q2021 achieved photovoltaic business income of 2.19 billion yuan, growing into an important leader of household photovoltaic. 3) 2021 is the first year for photovoltaic power generation to get online at parity, and we are optimistic that the decline in the cost of photovoltaic industry chain will lead to an increase in household photovoltaic returns. We estimate that the new installed capacity of household photovoltaic in industry will be 18/24/32GW in 2021, and Skyworth 2021 in 2022, and distributed photovoltaic shipments in 2023, corresponding to revenue of 4.6 billion yuan, 8.9 billion yuan and 11.7 billion yuan.
Global black electricity leader: 1) Skyworth Group is the global black electricity leader, and its business mainly includes the production and sales of color TV sets and set-top boxes. 2) Skyworth shipped 17.05 million color TV sets (including brands and OEM) worldwide in 2020, 8.5 million sets of global brand shipments, ranking seventh in global brand shipments. 3) Skyworth is the leader of set-top box in the world. In 2020, Skyworth sold 29.6 million digital set-top boxes, ranking first in the world. 4) the profitability of the company's color TV and set-top box business is weak due to the rising panel cost, chip shortage and other factors. We expect the above business profitability to continue to improve in 2022.
Profit forecast and valuation
The company's photovoltaic business exceeded expectations, and we raised our 2021 Universe profit forecast for 2022 by 3% to 1.03 billion yuan / 1.43 billion yuan. The current share price corresponds to a price-to-earnings ratio of 10.5 / 7.5 times 2022. We upgraded to outperform industry rating, raising the target price by 168% to HK $6.94, corresponding to 13.0 times 2022 price-to-earnings ratio, which has 48% upside compared to the current share price.
Risk.
The decline in silicon prices is not as expected; the county-wide distributed policy is not as expected; the company's photovoltaic business expansion is not as expected; panel costs are rising and the risk of chip shortage.