Main points of investment
Technological breakthrough drives the demand for diamond line: polysilicon black silicon technology has made a breakthrough, switching from mortar cutting to diamond cutting on a large scale. The improvement of cutting efficiency is the fundamental reason for replacing the use of diamond line. At the same time, diamond wire cutting also brings the advantages of reducing material loss, increasing film production rate, reducing pollution and so on. According to ITRPV forecast, after 2018, in the monocrystalline silicon chip market The market penetration of WEDM process will exceed 70%.
The WEDM process has been applied on a small scale in the polysilicon chip market since 2015, and we estimate that the permeability of WEDM in polysilicon will reach more than 80% from 2017 to 2020.
The demand for silicon wafers is initiated by photovoltaic rush installation: the scale of photovoltaic rush installation increased rapidly in 2017. The domestic wafer production in the first half of 2017 was 40GW, a sharp increase of 17.6% over the same period last year. The demand for polysilicon is about 184000 tons. It is estimated that the cumulative installed capacity of photovoltaic will reach more than 400GW by 2020. We estimate that with the continuous increase in the penetration rate of cutting diamond lines, the total domestic monthly demand is 2.5 million km. The existing domestic production capacity is 120km per month, and it is expected that by 2020, the cumulative demand of the Kumgang line in the field of photovoltaic cutting will reach more than 60 million km, with a large gap between supply and demand, and the tight supply of the Kumgang line will continue.
Semiconductor CMP DISK is worth looking forward to: in the semiconductor integrated circuit wafer manufacturing process, the CMP polishing pad is used to grind the flatness of the wafer surface. CMP DISK is the diamond grinding wheel, which is used to remove impurities on the CMP grinding pad during the grinding process. CMP DISK needs to be replaced in a certain period of time. At present, it is mainly produced by Japan, the United States, Taiwan and other companies, and the company will increase its R & D investment in the future. Technological innovation improves the quality of products.
The fund-raising project has been completed, and the performance has accelerated growth: the project with an annual output of 1 million km of diamond line is gradually invested, and the equipment is also put in place in batches according to market conditions. The project has been started by self-financing before the company's IPO, and is expected to be put into operation in the third quarter of this year. The total annual production capacity will reach 1.45 million km. The company will also according to the current situation of market shortage. Supply is still far from meeting market demand, and further expand production capacity, so as to better grasp market opportunities and achieve rapid growth of the company's performance.
Profit forecast and valuation: as a leading supplier of materials for the Diamond Line in China, benefiting from the tight supply and demand market of the Diamond Line, we estimate that the net profit of the company belonging to the parent company in 2017-2019 is 0.65 yuan 0.98 and 150 million respectively, the corresponding EPS is 1.25 yuan and 1.89 yuan respectively, and the corresponding valuation is 19 times as much as 45, 30 and 19 times, respectively.
Risk tip events: 1) the company's capacity expansion is not up to expectations; 2) the permeability of downstream polysilicon cutting diamond line is not up to expectations; 3) the rapid decline of photovoltaic installed scale is not as expected; 4) changes have taken place in industrial policy.