Introduction to this report:
Downstream photovoltaics, silicone drives industrial silicon demand, and the price balance between industrial silicon supply and demand is expected to remain stable. As a leader in the silicon industry chain, the company lays out products in the photovoltaic industry chain such as polysilicon, which is expected to bring about value reshaping.
Key points of investment:
Maintain an “increase in holdings” rating. Affected by the decline in industry sentiment, the company's 23-24 EPS was lowered to 4.91/6.43 yuan (originally 7.45/8.46), and the 25-year EPS was added to 7.79 yuan. Referring to comparable companies, the company was given 20 times PE, and the target price was lowered to 128.60 yuan (originally 134.26 yuan).
The performance was in line with expectations. Revenue in '22 was 23.657 billion yuan, YOY +10.62%, of which 22Q4 revenue was 5.382 billion yuan, +2.01%; net profit of 22Q4 was 5.148 billion yuan, YOY -37.64%, of which 22Q4 net profit was 594 million yuan, -41.13% month-on-month. 23Q1 revenue was 5.729 billion yuan, +6.65%; 23Q1 net profit returned to the mother was 1,003 billion yuan, -51.11% year on year and +66.86% month on month.
The expansion of industry production in '22 led to a decline in prosperity, and industrial silicon prices are expected to remain stable in '23. Industrial silicon and silicone ushered in a production expansion cycle in '22. Prices fell, and prices of silica, coal, etc. on the combined cost side rose sharply. Industry sentiment was affected, and performance declined year-on-year. Looking at it later, it is estimated that 23-24 will bring 156/1.74 million tons of industrial silicon demand in these two years, and organic silicon will bring demand of 1,16.4/1.20 million tons. The increase on the demand side is obvious. It is expected that the overall supply and demand for industrial silicon will balance, and silicon prices are expected to stabilize.
The release of polysilicon is imminent, and the industrial chain layout is gradually improving. In the next two years, the production capacity of industrial silicon and silicone monomers will expand to more than 2 million tons. The company's high-purity polysilicon project produces 200,000 tons per year, and it is expected that H1 will be put into operation one after another in '23. The 20,000 wide-bandgap semiconductor silicon carbide substrate and epitaxial sheet industrial production line project has recently passed inspection and achieved mass production. The company recently invested in the establishment of a number of new companies, involving new materials, electronic components, photovoltaic equipment, semiconductors, auto parts, etc., and the industrial chain layout has been gradually improved.
Risk warning: projects under construction fall short of expectations, risk of fluctuations in product volume and price