Event

The company announced that the new "trichlorosilicon project with an annual output of 50,000 tons" has obtained the relevant approval, has been started smoothly and runs stably, all the technological processes have been opened, and the project has entered the stage of trial production.

Brief comment

The new production capacity of trichlorosilicon is put into operation to consolidate the competitive advantage of silicon series of new materials. On November 13, the company announced that the new "trichlorosilicon project with an annual output of 50,000 tons" had obtained the relevant approval, had been started smoothly and operated stably, all the technological processes had been opened, and the project had entered the trial production stage. The project is planned to be built in October 2021, with a total investment of 149 million yuan.

After the project is put into production, the company has a total production capacity of 115000 tons of trichlorosilicon and 50,000 tons of high-purity silicon tetrachloroide. in addition, the company still has a capacity of 72200 tons of trichlorosilicon under construction. the basic construction project has been completed, and the project investment has been greatly reduced. it is expected to be put into production in the first quarter of next year, when the company's annual production capacity of trichlorosilicon will reach 187000 tons. The continuous extension and expansion of the company's production chain will help to improve the scale effect of the company's trichlorosilicon products, further enhance the market competitiveness of the company's products, and meet the downstream market demand and the matching needs of the company's internal products. In addition, benefiting from the expansion of polysilicon downstream, the follow-up boom of trichlorosilicon is expected to improve steadily. According to Baichuan Yingfu, during the period from 22Q4 to 23Q1, the planned production capacity of polysilicon is more than 400000 tons. In addition to the need to supplement trichlorosilicon in daily operation, the demand for one-time addition of trichlorosilicon during driving is higher, with an addition ratio of about 20%. Therefore, the substantial expansion of polysilicon production will increase the demand for trichlorosilicon, and then increase the price and prosperity of trichlorosilicon. In 2021, the average price of photovoltaic grade trichlorosilicon is 23500 / ton; since the beginning of this year, the average price of photovoltaic grade trichlorosilicon H1 is 23700 / ton, the highest point price is 27000 / ton, and the average price of Q3 has dropped to 21000 / ton. After Q4, the price rebounded under the pull of the growth of polysilicon demand. As of mid-November, the price of photovoltaic grade trichlorosilicon is 22,000 yuan / ton, and there is still room for further increase, which will help to improve the company's profitability.

Multi-product line collaborative layout, long-term growth momentum is sufficient. In addition to trichlorosilicon, the company's silicon-based materials also continue to expand production capacity and product layout. In terms of silane coupling agents, the company currently has a production capacity of 73000 tons of silane coupling agents and 15000 tons of intermediates, and is running steadily; at the same time, in July 22, the company announced that it intends to invest 230 million to build a new annual production capacity of 30, 000 tons of allyl chloride, which will further improve the raw material self-supply and integrated coordination capacity of the company's silane coupling agent products. In terms of gaseous silica, the company has a production capacity of 6000 tons, and the income and profit level of H1 products has achieved large-scale growth in 22 years. At the same time, product quality and sales prices are at a relatively high level among domestic brands.

In terms of electronic grade products, the company has a production capacity of 500 tons of electronic grade silicon dichloride. At present, the products have been supplied in batches to downstream customers, and at the same time, a number of domestic and international customers are in the stage of sample and factory inspection. At the same time, the company has a production capacity of 1000 tons of electronic grade trichlorosilicon, has achieved continuous supply to downstream customers, and has established a stable cooperative relationship with mainstream manufacturers in downstream silicon epitaxial wafers and silicon carbide industries.

In the first three quarters of 22, the performance maintained year-on-year growth and profits maintained a high level. Since the beginning of this year, the company's main products have been operating stably. New production capacity such as silane coupling agents has been built and contributed to profit increment. In the first three quarters, revenue reached 2.05 billion, year-on-year + 81%, and home net profit 620 million. Compared with the same period last year, + 152% Q3 achieved revenue of 710 million, + 44% year-on-year, and realized home net profit of 220 million, + 120% year-on-year. In the first three quarters, the gross profit margin / net profit margin was 43.0% / 30.3% respectively, and + 8.4% pct/+ / 30.3% respectively, compared with the same period last year. Q3 single-quarter gross margin / net profit rate was 43.7% / 30.5%, respectively, and + 8.2% / 10.6% in the same period last year. The company's potassium series currently has a production capacity of 56000 tons of potassium hydroxide and 100000 tons of potassium sulfate. with the continuous development and layout of new silicon-based materials such as trichlorosilane coupling agent, the company has sufficient momentum for long-term growth.

Profit forecast and valuation: the estimated return net profit of the company in 2022, 2023 and 2024 is 8.66,10.97,1.296 billion yuan respectively, the EPS is 3.2,4.0,4.7 yuan respectively, and the corresponding PE is 13.2x, 10.4x and 8.8x respectively. Taking into account the company's silicon-based new material production line coordinated layout, planning capacity is sufficient, long-term growth momentum is strong, give the company a "buy" rating.

Risk hints: (1) the production of the new project is not as expected: if the production capacity is not released smoothly, it will affect the company's output and then the performance release; (2) the price of raw materials: if the price of the company's main raw materials, such as silicon powder and potassium chloride, goes up, it may affect the company's gross profit margin, which in turn affects the company's profitability. (3) changes in the competition pattern of the industry: if there are major adverse changes in the future market environment or a substantial decline in the overall macroeconomic situation in industries such as trichlorosilane coupling agents, resulting in a substantial decline in the unit price of products or insufficient utilization of capacity, it may have an impact on the expected profitability of the company's project within a period of time. (4) the downstream demand is lower than expected: the lower-than-expected demand for products such as trichlorosilane and silane coupling agents will affect the company's operation.