Performance summary: the company issued a semi-annual report for 2022. 22H1 achieved revenue of 4.99 billion yuan, an increase of 112.5% over the same period last year; net profit of 390 million yuan, down 14.6%; and non-net profit of 360 million yuan, down 15.1% from the same period last year. Of this total, the revenue in the second quarter was 3.06 billion yuan, an increase of 143.6% over the same period last year; the net profit was 380 million yuan, an increase of 59.6% over the same period last year; and the non-net profit was 370 million yuan, an increase of 68.9% over the same period last year. Results resumed growth in the second quarter.
Leshan pull stick, cut square project gradually put into production, Wuhai base maintenance after resumption of production, 22Q2 profits with the same month-on-month growth. The overhaul of the company's Wuhaila crystal base in the first quarter has a certain impact on silicon wafer shipments; Leshan base is in the climbing stage and the gross profit margin is low. In the second quarter, the transformation of the company's Wuhai base was completed, Leshan base gradually reached production, shipping and profitability improved. In terms of comprehensive profitability, the comprehensive gross profit margin increased to 24.7% in the second quarter, about 14ppp higher than in the first quarter, and the net profit margin increased by about 11.7pp compared to the first quarter. On the other hand, silicon prices have been rising since 2022, and the company's wafer production costs continue to be under pressure, so the company's silicon wafer business gross profit margin in the first half of 22 is lower than that in 2021: 22H1's silicon wafer business achieved revenue of 4.074 billion yuan, an increase of 172.6% over the same period last year; but the gross profit margin is about 11.6%, which is about 15.2pp lower than in 2021.
Invest in Leshan Phase II 22GW pull rod and slicing project, and the wafer production capacity is expected to double by the end of 2023. In December 2021, the company announced the construction of Leshan Phase II pull rod and slicing project. due to technological progress and equipment upgrading, the planned production capacity was increased from the original 12GW to 22GW, with a total investment of about 5.36 billion yuan. In August 22, the company announced that Wuhai Phase II of the original project would be changed into Leshan Phase II, providing financial guarantee for the construction of the project, which is expected to be put into production in December 23. The current wafer production capacity of the company exceeds that of 20GW, so after Leshan Phase II project is put into production at the end of 23 years, the wafer production capacity of the company will exceed that of 42GW, doubling the current production capacity.
The profit of the new energy power generation business remains stable. By the end of June 2022, the company has installed 1.4GW in the new energy power stations connected to the grid, including 1.3GW in photovoltaic power stations and 148.5MW in wind power stations. 22H1's new energy power generation business achieved revenue of 650 million yuan, down 14.5% from the same period last year, but its gross profit margin increased to 61.4%, about 2.7pp higher than in 2021.
Profit forecast and investment advice: the profit of Wuhai and Leshan Phase I projects tends to be stable after the completion of climbing. Leshan Phase II 22GW wafer is put into production in 2023, and wafer shipments are expected to double in the later stage. We expect the company to return to its parent with a net profit of 49.1% in the next three years, giving the company 20 times PE in 23 years, with a target price of 13.4 yuan, with a "buy" rating for the first time.
Risk tips: the company's production capacity is not released as scheduled; the risk of rising raw material costs and declining profitability; the risk that global installation is not as expected and silicon wafer production is not as expected; and the risk of policy change.
