Jinyang New Energy, listed on Hong Kong Exchanges and Clearing's main board in 2011, formerly known as Baofeng Fashion, stock code: 1121.HK, was originally a traditional manufacturing enterprise. The company officially changed its name to Jinyang New Energy in 2021, reflecting the transformation of the company from a traditional manufacturing enterprise to a photovoltaic industry chain enterprise. The company's photovoltaic business builds a closed loop from single-cast silicon wafers to HJT battery wafers to single-cast flexible applications. The sales of single cast silicon wafer is the main driving force of the company's performance growth in the next 2 years. The company produces silicon wafers with similar single crystal performance at low cost through ingot casting. It is expected that the single cast silicon wafer production capacity will reach 7GW by the end of this year and double next year. At present, single cast silicon wafer has signed part of the sales agreement and started to supply. The company cooperates deeply with Junshi Energy, a domestic HJT equipment leader, and plans to produce single-cast HJT battery wafers using its own single-cast silicon wafers, with a mass production conversion efficiency of more than 24%. It is a HJT battery chip with high performance-to-price ratio. The company has also developed flexible solar modules produced by HJT panels, which are expected to be put on the market in the future. We forecast that the net profit of Jinyang New Energy will reach 150 million, 1.2 billion, 1.95 billion yuan in 2021, 2022 and 2023 respectively. We covered for the first time, giving a buy rating, with a target price of HK $14.50, equivalent to 10 times forecast PE in 2023 and 47 per cent upside from the current share price.
Summary of the report
Single cast silicon wafer has achieved mass production, production capacity continues to expand. Single cast silicon wafer is the first link of mass production in the company's photovoltaic business, and it is also the main driving force of the company's performance growth in the past two to three years. Single-cast silicon wafers, ingot-like single crystal silicon wafers are produced, reflecting the ultimate cost performance. The company's single wafer production capacity will reach 7GW by the end of this year, and will continue to expand to 15GW next year.
The company will further expand its single wafer production capacity, the company has signed an investment agreement with Xuzhou Economic and technological Development Zone to invest in 20GW wafer projects, and the local government will give 400 million yuan in incentives for infrastructure construction. We expect to reach capacity 20GW in 2023. The company has signed a framework agreement with Jiangsu Runyang for the sale and sale of single cast silicon wafers with a supply of 200 million wafers. The company also signed a single cast silicon wafer sales agreement with Taiyi Photovoltaic and Panda Photovoltaic, with a supply of 100 million wafers respectively. The company has supplied Taiyi photovoltaic with single cast silicon wafers, including 158 and 182 sizes. The company is also actively in contact with downstream customers, customers continue to develop.
Under the current situation of high price in the photovoltaic industry chain, the extreme performance-to-price ratio of the company's single cast silicon wafer is attractive to battery manufacturers. We expect that the company's single cast silicon wafer sales will grow rapidly, which is the company's performance growth point.
The company's photovoltaic business creates a closed loop from single-cast silicon wafers to HJT battery wafers to single-cast flexible applications. The company and strategic partner Junshi Energy in-depth cooperation in HJT battery chip link. The conversion efficiency of HJT battery produced by the company's single casting silicon wafer is more than 24%. HJT battery chip is a popular route for the next generation battery chip, but the high cost affects the progress of mass production of HJT. The use of single cast silicon wafer greatly reduces the production cost of HJT, and single cast HJT battery has high performance-to-price ratio, which is expected to accelerate mass production.
The company and strategic partner Jinshi Energy jointly build the National Engineering Research Center for High efficiency Solar Cell equipment and Technology. The establishment of this national platform further strengthens the company's technical reserve in the field of battery chips. Making use of the soft characteristics of single-cast HJT battery, the company has developed flexible components, which can be easily used in home, office and other scenes, and can promote mass production after testing. While realizing the mass production of single-cast silicon wafers, the company has carried out the technology reserve layout of the whole industry chain, such as single-cast HJT battery wafers and flexible components, and the technology layout downstream, which will help to enhance the sales of single-cast silicon wafers, which we believe is also the driving force for the company's medium-and long-term business development.
For the first time, coverage gives a "buy" rating. We predict that the operating income of Jinyang New Energy in 2021, 2022 and 2023 will reach 1 billion, 5.3 billion and 6.47 billion yuan respectively, and the net profit will reach 150 million, 1.2 billion and 1.95 billion yuan respectively.
The company is developing rapidly in the photovoltaic business. We cover the "buy" rating for the first time, and we estimate that the company has a market capitalization of HK $23.8 billion and a target price of HK $14.50 at 10 times PE in 2023, which is 47 per cent higher than the current share price.
Risk hint: the company's single-cast silicon wafer customer expansion progress is slower than expected; the operating rate of battery manufacturers is low, the demand for silicon wafer slows down, and shipments are slower than expected; the price of polysilicon material rises faster than expected; the expansion of silicon wafer link is faster than expected.
