Incidents:
The company released its report for the third quarter of 2022. Q1-Q3 achieved revenue of 10.804 billion yuan, an increase of 5.44%; achieved net profit of 1,651 billion yuan, an increase of 9.32%; and achieved net profit of 1,481 million yuan after deducting non-return mother's net profit, an increase of 1.05%.
Comment:
Q3 performance increased year over year, mainly due to the impressive growth rate of the company's solar energy business. 2022Q1-Q3 performance increased 9.32%, growing faster than revenue, mainly due to: 1) the asset impairment loss rate decreased by 6.82 pct to 0%; 2) the expense rate decreased by 0.09 pct to 11.72% during the period; 3) the income tax rate decreased by 3.41 pct to 14.57%. Among them, 2022Q3 achieved revenue of 4.285 billion yuan in a single quarter, an increase of 17.97% over the previous year; it achieved net profit of 649 million yuan, an increase of 312.78% over the previous year. The core reason was high silicon prices+the smooth rise in polysilicon production capacity, and the growth rate of the company's solar energy business was impressive.
Gross margin is still under pressure, and cost control is good. The gross margin of 2022Q1-Q3 decreased by 8.74pct to 28.79%, mainly due to the slowdown in real estate demand and the rise in raw fuel prices; the cost rate for the period decreased by 0.09pct to 11.72%. Among them, the sales, management, R&D, and financial expenses rates increased by 0.16pct, -0.46pct, 0.39pct, and -0.18pct to 2.02%, 4.71%, 4.01%, 0.98%, and cost control was good.
Continuously optimizing the process, the market competitiveness of crystalline silicon products is outstanding. The company continuously optimizes processes in production, continues to reduce costs and increase efficiency, and production capacity has broken through record highs, while silicon unit consumption, comprehensive electricity bill consumption, steam unit consumption, etc. have all reached record lows. After the resumption of production, high-purity crystalline silicon relied on product quality and market reputation to quickly enter the industry's leading manufacturers. Electronic-grade high-purity crystalline silicon dense materials have met the usage requirements of N-type battery customers, and market competitiveness is outstanding.
Changyue has been tied to downstream customers, and production capacity of 50,000 tons is progressing in the future. The company expects to sell a total of 70,000 tons of high-purity silicon raw materials products to Tianhe Solar from 2023 to 2026. The subsequent 50,000-ton high-purity crystalline silicon project in Qinghai has completed site selection analysis, technical plans, organizational capacity, schedule planning, investment estimates, etc., and the top-level design has been initially completed. The long-term major contract signed with Tianhe Solar will lock down some product sales channels and help corresponding production capacity to be implemented as soon as possible.
Maintain a “buy” rating. According to the adjusted profit forecast based on expectations of poor performance and real estate, the estimated EPS from 2022 to 2024 will be 0.66/0.56/0.62 yuan, and the corresponding PE will be 10.02/11.82/10.70 times.
Risk warning: glass prices fall short of expectations, production capacity falls short of expectations, performance and valuation fall short of expectations