Incident: The company announced 21FY and 22Q1 financial reports. 21FY achieved revenue of 320 million yuan, yoy -2.6%, achieved net profit of -200 million yuan, year-on-year - 70 million yuan, net profit of non-return to the mother - 150 million yuan, year-on-year - 0.2 billion yuan. The performance was slightly lower than the median value of the previous performance forecast. 22Q1 achieved revenue/net profit of -0.8/-0.3 billion yuan after deducting net profit of -0.8/-0.3/-0.3 billion yuan after deducting 21Q1 respectively.
Traditional business impairment measures put light weight into play. Looking at operating cash flow pressure by business segment, 21FY's security glass/steel door and window fire profiles/installation projects achieved revenue of 0.5/1.9/70 billion yuan respectively, compared to -18.3%/-5.9%/+21.2% compared to -18.3%/-5.9%/+21.2%, gross margin was 29.3%/30.5%/22.9%, respectively +1.5/+1.0/+5.1pct over the previous year. The gross margin of the company's traditional main business has increased, but due to the regulation of the real estate market and the tightening of financing policies, the willingness of the company's real estate customers to start construction has declined markedly, leading to a decrease in new orders and a decline in revenue from various businesses. 21FY glass production is 770,000 square meters, YOY +1.8%, sales volume is 730,000 square meters, YOY -0.5%, production and sales rate is 94.8%; the comprehensive unit price of glass is 431 yuan/square meter, YOY -3%. 21FY reduced a total of 125 million yuan in value, of which individual impairment amounts to 60.36 million yuan.
HJT batteries achieved the first batch delivery, and performance elasticity can be expected
In June 2021, the company announced an investment of 832 million yuan to build a 1.2 GW heterojunction battery and module project. On March 12, 22, production was initially put into operation, and HJT battery modules entered the 700W+ era. Looking at the conversion efficiency, from 24.3% (March 28) to exceeding 24.5% (April 9), it only took a few tens of days. By the time the first batch of orders was delivered on April 19, the conversion efficiency had already exceeded 25%. Furthermore, the company's project was approved and announced by the Suzhou Bureau of Ecology and Environment on April 20. On the customer side, the company's first batch of overseas orders for 210 heterocrystalline cells has now been delivered, and we expect the delivery progress of the second batch of products to accelerate. Although the cost of HJT technology is currently higher than PERC and TopCon, we expect overseas customer order prices to be higher than domestic customers. At the same time, the cost of releasing HJT from silicon materials in the second half of the year is expected to decrease accordingly, and the company's HJT profit may exceed expectations throughout the year.
At the industry level, Huasheng's second phase 2GW module project went live on April 25. Currently, the conversion efficiency is as high as 22.5%. Longji plans to build an HJT pilot line of 1.2 GW recently (currently the highest efficiency of Longji's indium free HJT battery laboratory is 25.4%). At the same time, the Dongfang Risheng 5GW project (phase I, there will still be 10 GW later) passed the EIA. The construction period is about 1 year. It is expected that 23Q1 will be released. Since this year, HJT technology has been catalyzed a lot. Continued attention has been paid to the progress of cost reduction and the mass production efficiency of various enterprises.
The majority shareholder's HJT project is actively advancing, and business collaboration can be expected to maintain the “buy” rating. Currently, Ou Hao's 4.8 GW HJT battery module project is being actively promoted. The first phase of 2.4 GW began at the end of July 21, and trial production is expected to begin by the end of October this year. Ou Hao Group is the controlling shareholder of the company. We expect to collaborate with shareholders in the future to absorb part of production capacity. Considering that the traditional main business is related to real estate, we lowered our profit forecast slightly. We expect the company's net profit to be 0.3/122/140 million yuan in 22-24 (previous value of 0.4/140 million yuan in 22-23), corresponding to PEG 1.6/0.44/0.37, maintaining the “buy” rating.
Risk warning: The progress of the HJT project fell short of expectations, the release of silicon production capacity fell short of expectations, and downstream customer expansion fell short of expectations