Event: Fuxing Technology, a subsidiary of the company, signed an agreement with Huangshi Green Energy, stipulating that Fuxing Technology will sell no less than 2.5 billion solar single crystal wafers (model: N/182/210/T130-150resistivity 0.3-2.1ohm) to Huangshi Green Energy, with an estimated total sales amount of about 19.5 billion yuan (including tax). The performance period of the contract is from May 1, 2023 to December 31, 2027, of which the procurement volume is not less than 300 million in 2023 and not less than 550 million in 2024-2027.
With the high-speed penetration of N-type battery, the company's silicon wafer business ushered in the opportunity of volume expansion. In terms of conversion efficiency, the theoretical conversion efficiency of N-type batteries can exceed 28%, while the traditional P-type efficiency of 23-24% is close to the bottleneck. In terms of cost, the cost of N-type battery has a large reduction space: silver-clad copper, multi-grid and other technologies significantly reduce the silver paste cost; at the same time, the localization rate of photovoltaic equipment is increased, and the equipment cost and depreciation cost have room for continuous reduction. It is expected that the new production capacity of N-type battery will exceed 300GW in 2022-2024. Benefiting from the battery iteration, we expect demand for N-type wafers to triple to quadruple in 2021-2024 and surpass 110GW in 2024. However, the existing wafer production capacity in China is mainly P-type. In 2021, the output of N-type wafer in China is only 9.5GW, accounting for 4.1%. Under the downstream iterative trend, there is more space for N-type silicon wafer to replace P-type silicon wafer.
Fuxing Technology, the company's holding subsidiary, focuses on N-type silicon wafers. Tong Xingxue, the project leader, and the team have accumulated nearly 20 years of experience. In the industry has shown an obvious trend of N-type silicon wafers to replace P-type, is expected to usher in volume opportunities.
Photovoltaic business progressed smoothly and steadily opened the second growth curve. The company began to release photovoltaic materials in the third quarter: 1) 10GW photovoltaic wafers: 1.5-2GW wafers have produced qualified wafers and wafers in June and are currently in trial production, and the trial-produced products have been verified and approved downstream, and their technical indicators have also reached the first-class level of industrialization in the industry. 2) 8GW photovoltaic glass: the first phase of 1000 tons / day photovoltaic glass line and 1GW module production line has started trial production.
The second phase is under construction and is expected to be completed by the end of the year. The photovoltaic business is progressing smoothly and realized steadily.
The traditional chemical business has strong profitability. As of the semi-annual report, the company's traditional chemical sector has 1.1 million tons of alkali, 150000 tons of double glyphosate, 45000 tons of glyphosate, 70,000 tons of liquid methionine, 1 million tons of phosphate rock and 500000 tons of double glyphosate. According to Baichuan Yingfu, as of November 1, the price of heavy caustic soda is 2759 yuan / ton, the price of ammonium chloride is 940 yuan / ton, the price of glyphosate is 528000 yuan / ton, and the price of double glyphosate is 32,000 yuan / ton.
Profit forecast and investment advice. We estimate that the operating income of the company from 2022 to 2024 will be 148.26, 249.87 and 31.74 billion yuan, respectively, and the net profit will be 42.72 billion, 52.47 and 4.4 times, respectively, and the corresponding PE will be 6.2, 5.0 and 4.4 respectively. The company's main business to maintain a high economy, photovoltaic silicon wafers, photovoltaic glass began to concentrate production in the third quarter. The photovoltaic sector business is expected to contribute about 50% of the company's homing net profit in 2024, and the company is expected to continue to improve its valuation center and maintain its "buy" rating.
Risk hint: the production of new capacity is not as expected, and the demand for photovoltaic is not as expected.