Events:
On October 26, 2022, Hesheng Silicon Industry issued a third-quarter results announcement: in the first three quarters of 2022, the operating income was 18.275 billion yuan, + 29.09% compared with the same period last year; the net profit was 4.554 billion yuan,-9.17%; the non-return net profit was 4.543 billion yuan,-8.86%; and the weighted average return on net assets was 20.97%, down 17.82 percentage points from the same period last year. The gross profit margin of sales was 40.19%, down 8.86% from the same period last year, and the net profit margin of sales was 24.89%, down 10.68% from the same period last year.
2022Q3 realized operating income of 5.276 billion yuan, year-on-year-17.74%, month-on-month-20.19%; realized return-to-home net profit of 1.009 billion yuan, year-on-year-61.62%, month-on-month-32.42%; realized non-return net profit of 1.014 billion yuan, year-on-year-61.11%, month-on-month-31.48%; return on net assets was 4.46%, decreased by 12.4% year-on-year, and increased by 2.29%. The gross sales margin was 36.63%, down 18.41% from the same period last year and 0.67% from the previous year; the net sales margin was 19.06%, down 22.09% from the same period last year and 3.48% from the previous year.
Main points of investment:
The performance in the third quarter declined from the previous quarter, and the sales volume and unit price of industrial silicon decreased. 2022Q3 realized operating income of 5.276 billion yuan,-17.74% year-on-year and-20.19% compared with the same period last year; realized net profit of 1.009 billion yuan,-61.62% year-on-year and-32.42% compared with the same period last year; and realized net profit of 1.014 billion yuan,-61.11% and-31.48%, respectively. The decline in performance in the third quarter was mainly due to several reasons: 1) the epidemic affected factory production. Shihezi Base is located in Xinjiang. Due to the impact of the epidemic in the third quarter, the operating rate was insufficient. On the premise that the 400000 tons of industrial silicon project in Shanshan has already started trial production in July, the industrial silicon output in the third quarter was 239300 tons, only 457 tons more than in the second quarter. 2) the demand for organosilicon and silicon-aluminum alloy downstream is insufficient, and the company's industrial silicon sales declined in the third quarter, only 115400 tons, compared with-31.61%.
The price of industrial silicon declined in the third quarter. Take industrial silicon 441 as an example, according to wind, the average price in the third quarter was 19,600 yuan / ton,-1.12% compared with the previous quarter. 3) the demand for organosilicon is sluggish and the price gap narrows.
The demand for organic silicon and silicon-aluminum alloy is expected to pick up in the fourth quarter, and a number of polysilicon projects downstream have been put into production. Yunnan and Sichuan have gradually entered a dry period, and industrial silicon supply has decreased. It is expected that the industrial silicon scene is expected to improve from the fourth quarter to the first quarter of next year.
It is progressing smoothly in the construction of production capacity and further consolidating its leading position in the industry.
The company has industrial silicon production capacity of 1.19 million tons / year, organic silicon monomer production capacity of 1.33 million tons / year, and 400000 tons of industrial silicon and 200000 tons of silicone projects under construction, which are expected to be gradually put into production from 2022 to 2023. At the same time, the company has also planned polysilicon and photovoltaic glass projects, capacity expansion to further consolidate the company's leading position in the industry.
Large amount of new polysilicon production capacity, optimistic about new industrial silicon demand according to China Energy Network data, from 2021 to early 2022, at least 14 companies in the photovoltaic industry will invest or expand production of polysilicon, with a total production capacity of more than 2.09 million tons. it is expected to be gradually released in 2022-2024, bringing a broad demand space for industrial silicon. At the same time, the end of the fourth quarter to the second quarter of next year is a dry period, water and electricity costs are increased and supply is reduced. At the same time, provide support on the cost side, optimistic about the company's industrial silicon sales from the fourth quarter to the second quarter of next year.
Profit forecast and investment rating
Taking into account the decline in downstream demand, we lowered the profit forecast, the company is expected to return to the home net profit of 61.12,87.60 and 10.3 billion yuan in 2024, respectively, corresponding to PE of 17,12,10 times, considering the polysilicon demand is expected to increase, the company has large-scale advantages and maintain the "buy" rating.
Risk hint
The risk of project production falling short of expectations, the risk of falling product prices, the risk of declining product demand, the risk of factory safety and environmental protection, and the risk of substantial expansion of industry production capacity.