Main points of investment
Kamdanke Solar Energy is one of the main monocrystalline silicon manufacturers in China. The company is one of the major single crystal silicon production enterprises in China. At present, single crystal silicon wafer production capacity 400MW, mainly produces N-type silicon wafer, the conversion efficiency can reach 24%, in the industry leading position. According to customer feedback, the conversion rate of the company's super single crystal battery wafer can exceed 25%. The company's main business is the pulling rod and slicing of monocrystalline silicon, which shipped 197.7MW in the first half of 2015.
Malaysian production capacity is about to be released. The company's new production base in Malaysia will reach production in the first quarter of 2016, with a design capacity of 300MW in the first phase and will gradually increase to 1GW in the later stage. Malaysia's production base will be basically at full capacity after reaching production. The company's capacity is expected to be 700MW in 2016, and shipments are expected to increase significantly for the whole year. In addition, the establishment of a production base in Malaysia can also effectively avoid the risk of photovoltaic trade conflict between the United States and Europe against China.
The gross profit margin will gradually increase. The company's gross profit margin has remained low in the past few years, only 2.5% in the first half of 2015 (6.6% for the whole of 2014), but we judge that the company's gross profit margin will pick up significantly in the next 1-2 years. The main reasons are: 1), benefiting from the lower local electricity and labor costs, the gross profit margin of the Malaysian production base will reach 15%, which will effectively increase the company's overall gross profit margin. And in the future, the company does not rule out the possibility of relocating domestic production capacity to Malaysia one after another. 2) the high cost of polysilicon in the previous long-term supply contract with the supplier is the main reason for the low gross margin, and the contract will expire at the end of 2016. The company's current wafer processing cost is US $0.14 per watt, and it is expected to drop to US $0.1-0.12 per watt after the Malaysian project is put into production. The current tax rate of Malaysian companies is obvious, there is no value-added tax, and investment in fixed assets can be tax-deductible, but also can save corporate tax expenditure.
The progress of domestic distributed photovoltaic is relatively slow, but the future space is huge. As an efficient single crystal photovoltaic product producer, we are optimistic that the company will benefit from the promotion of domestic distributed photovoltaic projects for a long time in the future. However, due to many factors, such as the unclear role of the government in the process of distributed photovoltaic promotion, the lack of a suitable legal system and commercial behavior in the industrial cycle, and so on, the progress of distributed projects is slow. In the past few years, the planning goal of distributed installation has not been completed in China.
The advantage of the client is outstanding. The company has been certified by a number of downstream customers at home and abroad and signed supply agreements with a large number of customers, including Mission Solar, Sunpower, Panasonic, Sharp and so on. It is expected that the company can continue to consolidate its relationship with customers and maintain its advantages in downstream customer resources and channels.
Photovoltaic grid electricity price adjustment policy landed, the industry is facing new opportunities for development. On December 24, the National Development and Reform Commission issued the Circular on improving the online Benchmarking Price Policy for onshore Wind and Photovoltaic Power Generation. The online electricity price policy has been adjusted and the industry is facing new opportunities for development. Compared with polycrystalline photovoltaic products, the reduction of benchmarking price is beneficial to enhance the competitiveness of single crystal products.
Our point of view: it is expected that the monocrystalline silicon market will grow rapidly in the first half of 2016 due to the domestic photovoltaic rush market. The company's new production capacity in Malaysia is also about to be released, gross profit margin is expected to increase, performance is significantly improved. We initially estimate that the company's full-year results in 2015 will remain at a loss and are expected to turn into profits in 2016. Investors are advised to pay close attention to it.
Risk hint: Malaysia's new capacity production progress is not as expected, monocrystalline silicon market growth is not as expected.