The company signed a major contract with Trina Solar to sell 70,000 tons of high-purity silicon products to Trina during 2023-2026, with a total expected sales of 21.21 billion yuan (including tax). Binding to downstream high-quality customers is conducive to the stable sales of the company's high-purity silicon products; at the same time, the company also has 50,000 tons of polysilicon production capacity planning in Qinghai, the continuous release of polysilicon capacity will provide growth and maintain the "buy" rating.
Matter: the company announced that the company signed a major contract with Trina Solar Energy, which is expected to sell 70,000 tons of high-purity silicon raw materials to Trina Solar Energy during the period from 2023 to 2026. If calculated according to the current market price (based on the latest average price of polysilicon published by PVInfoLink), the company expects total sales of 21.21 billion yuan (including tax), corresponding annual sales of 17500 tons, sales exceeding 5 billion yuan.
Benefiting from the growth in photovoltaic demand, the polysilicon boom is expected to continue. Polysilicon is a key raw material for the photovoltaic industry, and the demand is expected to maintain rapid growth under the dual-carbon policy. On the supply side, although there are more production expansion plans in the industry, the polysilicon investment scale is larger, the technical threshold is higher, the production cycle is longer, and the production capacity is released more slowly, compared with other links of the industrial chain.
Join hands with Trina Solar, the company's polysilicon business has come to the fore. The company has laid out the field of polysilicon earlier, with more technology accumulation, and with the smooth resumption of production of 10,000 tons of polysilicon production line this year, the company relies on product quality and market reputation to quickly enter first-tier factories in industries such as Tianhe, Jingke, Ates, Gaojing, Shuangliang and other industries, electronic grade high-purity silicon densifier has reached the requirements of N-type battery customers, showing a strong competitiveness.
The long-term signing with Trina Solar reflects customers' recognition of Southern Glass technology and products, and is expected to continue to break into the supply chain of new customers; in addition, it is also effectively bound to downstream high-quality customers through long-term contracts, which is conducive to the stable sales of the company's high-purity silicon products, improves the certainty of capacity consumption, and helps to alleviate the pressure on investment and expenditure of production expansion projects.
The follow-up company still has a large plan for polysilicon production capacity, which is expected to further increase profits. With the resumption of polysilicon products widely recognized by the market, the company announced that it intends to raise 4.49 billion yuan through the issuance of convertible bonds to invest 4.49 billion yuan to build a 50,000-ton high-purity silicon project in Qinghai, so as to further expand the solar energy business and enhance the overall competitiveness of the group. At present, the preliminary top-level design of the Qinghai project has been completed. after the completion of the project, it is expected to achieve an average annual sales income of 3.389 billion yuan and an average annual net profit of 863 million yuan. The company estimates that the payback period of the project investment (after income tax) is 5.19 years, and the financial internal rate of return (after income tax) is 28.64%. It will effectively increase the company's profits after it is put into production in the future.
Risk factors: macroeconomic pressure; new business development is not as expected; contract implementation is not as expected; raw fuel costs are rising.
Investment advice: the company is a veteran leader in the glass industry, float glass fundamentals are expected to improve with the concentrated release of demand, photovoltaic glass expansion capacity, electronic glass competitiveness continues to enhance, polysilicon expansion and thickening profits, future performance has growth. We maintain the company's 2022-2024 homing net profit forecast of 25.25, 3.313, 3.715 billion yuan, corresponding to the EPS forecast of 0.82, 1.08, 1.21. With reference to the comparable company valuation (float glass enterprise Xinyi Glass and Qibin Group 2023 average valuation corresponding to 7xPE, photovoltaic glass enterprise Xinyi Solar and Fulette 2023 average valuation 17xPE, electronic glass enterprise Kaisheng Technology 2023 valuation 21xPE, polysilicon enterprise Tongwei shares, Daquan Energy 2023 average valuation 10xPE) and the company's photovoltaic / electronic glass / polysilicon business growth, give the company 9 times PE in 2023. Maintain a "buy" rating corresponding to the target price of 10 yuan.