Investment summary
Photovoltaic is still in a relatively prosperous cycle. According to the data of CPIA, the newly installed photovoltaic is about 42GW from January to September 2017, an increase of nearly 60% over the same period last year, of which the distributed installed 15GW increased by more than 300% over the same period last year. The whole new photovoltaic installation continues to maintain a high boom. After the 6.30 rush, distribution has become a new growth force. Based on the reduction of future distributed subsidies, the Q4 distributed market in 2017 will continue to rush to install. The compound growth rate of new photovoltaic capacity in the world from 2017 to 2020 is 6%. The new installed capacity of photovoltaic in China is higher than expected, and is expected to be 35GW + per year in the future. The new installation of photovoltaic worldwide in 2020 is expected to reach 118GW.
Polysilicon diamond line transformation does not wait for time, the diamond line production capacity gap is obvious. Under the pressure of monocrystalline silicon production capacity, polysilicon enterprises led by Poly Xiexin are very urgent for the transformation of polysilicon wafers. Poly Xiexin expects that the output of diamond wire-cut silicon wafers will account for more than 90% by the end of 2017. From an industry-wide point of view, the proportion of polycrystalline rigid lines may exceed 60% in 2017 and is expected to reach 100% in 2018. Based on the above assumptions, we estimate that the demand for photovoltaic diamond lines from 2017 to 2020 will be 2351, 3887, 4184 and 44.4 million km, up 87.53%, 65.3%, 7.66% and 6.1% over the same period last year. We have counted the production capacity planning of the Kumgang line of mainstream enterprises, totaling 30.14 million km. Even in the most optimistic case, all of these capacity can reach production capacity, and the capacity gap is still obvious. The demand for the diamond line is concentrated in 2017-2018, whether these capacity is put into production in time there are problems, existing enterprises will fully benefit.
The company's customers cover major photovoltaic enterprises, and continuous production expansion is expected to usher in scale effects. The company has a full range of electroplated diamond lines, including wire diameter 0.06mm-0.45mm products. The company's downstream customers cover Jiangsu Xiexin, Jinglong Group, Longji shares, Central shares and other mainstream photovoltaic enterprises, according to the company's announcement, the company's annual output of 1 million km electroplated diamond line investment project equipment investment and capacity release will all be in place in the third quarter. According to the market demand, the company will further expand the production capacity of the electroplating diamond line on the basis of the implementation of the investment project. We believe that with the continued implementation of the company's production expansion, the company is expected to usher in the scale effect, the cost reduction of the company's electroplating diamond line is expected to cover the rate of price decline, and the gross profit margin is expected to stabilize (the production capacity of the diamond line of Dale new material has reached 780000 km, and the cost reduction of the diamond line covers the rate of price decline).
Investment advice. It is predicted that the company's sales revenue in 2017, 2018 and 2019 will be 2.37,3.81 and 487 million yuan respectively. The net profit belonging to the parent company is 5655, 8421 and 106.92 million yuan, the EPS is 1.09,1.62,2.06 yuan, and the corresponding PE is 62.4,41.9 and 33 times. Coverage for the first time, giving the company a "cautious overweight" rating.
Risk hint. The progress of the transformation of polysilicon diamond wire is not as expected.