On June 8, the company announced that it would invest in the construction of a trichlorosilicon expansion project with an annual output of 72200 tons. We believe that at present, the supply and demand pattern of downstream polysilicon industry is still tight, the demand of silane coupling agent industry is strong, trichlorosilane scene is high, and the expansion project of the company can timely grasp the high prosperity window of products and improve profitability.
We raise the company's homing net profit forecast for 2022-2024 to 1.870 billion yuan for 2022-2024 (the original forecast is 1.078-1.501 billion for 2022-2024), corresponding to 3.41 PE for 2022-2024, and the current stock price corresponds to 8.7 billion PE. With reference to the average valuation of comparable companies (Hongbai Xincai, Chengguang Xincai 2022 Wind unanimously expected 18 times PE), we believe that the company's trichlorosilicon production capacity to further increase, cost advantage, stable leading position, should be given a corresponding valuation premium, a reasonable market capitalization of about 20 billion yuan, adjust the target price to 75 yuan, corresponding to 2022 valuation of 22 times PE, maintain the "buy" rating.
72200 tons of trichlorosilicon project expansion, profitability is expected to be further enhanced. On June 8, 2022, the company announced "notice on investing in the construction of trichlorosilicon expansion project of 722,000 tons / year". The implementation of the expansion project on the basis of 50,000 tons / year trichlorosilicon project will further enhance the production level of trichlorosilicon and enhance the competitiveness of products. According to the company announcement, the total investment of the project is 75.2652 million yuan, and the static payback period after tax is about 0.78 years. We believe that the company's expansion of production capacity will further enhance profitability, expand scale advantages, and enhance market competitiveness.
The period of concentrated production of silicon material is approaching, the high prosperity of trichlorosilicon is maintained, and the upward trend of price is clear. Trichlorosilicon is an important raw material for the production of silicon. Under the background of the sharp rise in the price of silicon, the demand has improved, and the market supply is still in short supply. According to Baichuan information statistics, in May 2022, the average price of photovoltaic grade trichlorosilicon was about 27,000 yuan / ton, an increase of about 59% compared with the beginning of the year. Benefiting from the carbon neutralization policy, it is expected that the concentrated production of silicon materials in the third and fourth quarters of 2022 will greatly boost the procurement demand of trichlorosilicon, and the prosperity of photovoltaic trichlorosilicon is expected to continue to rise.
The capacity expansion project has the advantages of fast progress, strong replication and excellent return. The company added 72200 tons of trichlorosilicon and produced 28900 tons of silicon tetrachloride at the same time. The company carries on the expansion and transformation on the existing technical route of stable production, the technology is mature, at the same time, with the help of the original hydrogen chloride pipeline and public works, the replication is strong. According to the feasibility analysis report of the company's expansion project, the construction period of the project is half a year, and it is planned to be tested in November 2022. The construction will be completed by the end of 2022. The project will be put into production for 2 months, the load will reach 50%, and the load will reach 100% after 4 months. We expect the project to achieve stable sales by 2023. In the context of the continuous upward price of trichlorosilicon, we believe that the company's capacity expansion can grasp the high economic window in time, achieve excellent return on investment and achieve rapid profitability growth.
Silane coupling agent is about to be put into full production and is expected to become a new performance growth point. The company's silane coupling agent project phase I 15000 ton project has achieved partial sales, and the company expects the second phase of the 73000 ton project to be fully put into production in 2022. After the release of production capacity, it will become a new performance growth point, with its own chlorosilane industry chain complete advantage, the project has a significant cost advantage. At the same time, the company expects the project with an annual production capacity of 50,000 tons of trichlorosilicon and 20,000 tons of silicon tetrachloride to be put into production in the third quarter of 2022, and the commissioning of 72200 tons of trichlorosilicon expansion project will further enhance the supply capacity of the core raw material trichlorosilane coupling agents, which will further consolidate the company's cost advantage and enhance its anti-risk ability.
The company's electronic gas products have been partially supplied in batches, achieving a breakthrough in the field of special gas in the field of chip manufacturing.
The company's electronic-grade gas project was officially produced in October 2021, and electronic-grade trichlorosilicon has achieved downstream silicon epitaxy and large-scale supply of silicon carbide industry, and completed the comparison of pre-product data with some customers. We will continue to promote the follow-up introduction and testing work and break the monopoly of foreign enterprises on this kind of special electronic gases. With the continuous acceleration of the localization substitution process of the chip industry and the rise of domestic chip enterprises, the company is expected to occupy a large number of domestic market share by virtue of stable and excellent product performance, thus achieving considerable development.
Risk factors: product prices fluctuate sharply; the progress of existing projects under construction is lower than expected; the progress of the proposed expansion project is lower than expected; the profit of the proposed expansion project is lower than expected; the expansion of trichlorosilicon industry exceeds expectations; the performance indicators of electronic-grade products do not meet the downstream demand; the process of chip localization has been thwarted.
Investment suggestion: we believe that at present, the supply and demand pattern of the downstream polysilicon industry is still tight, the silane coupling agent industry demand is strong, the trichlorosilane scene is high, and the company's expansion project can timely grasp the product boom window period and improve profitability. We raise the company's homing net profit forecast for 2022-2024 to 1.870 billion yuan for 2022-2024 (the original forecast is 1.078-1.501 billion yuan for 2022-2024), corresponding to 3.41 PE for 2022-2024, respectively, and the current stock price corresponds to 8.7 billion PE. The company is the leader of the silicon-based industrial chain, with the high-end product structure and diversification, firmly optimistic about the long-term development of the company.
With reference to the average valuation of comparable companies (Hongbai Xincai and Chenguang Xincai have a consistent expectation of 18 times PE in 2022), we believe that the company's trichlorosilicon production capacity is further improved, its cost advantage is expanded, and its leading position is stable, and it should be given a corresponding valuation premium, with a reasonable market capitalization of about 20 billion yuan, and an adjustment target price of 75 yuan, corresponding to a 2022 valuation of 22 times PE, maintaining the "buy" rating.
