Main points of investment

2023H1's silicon profits remain high. According to the 2023 semi-annual report released by the company, the company achieved an operating income of 9.325 billion yuan (- 42.93%) and a net profit of 4.426 billion yuan (- 53.53%) in the first half of the year. Affected by the sharp decline in silicon material, the performance dropped somewhat compared with the same period last year, but the gross profit margin and net profit margin were 57.67% and 47.47% respectively, which remained high.

The first phase of Baotou climbed smoothly, helping the company's production capacity break through 200000 tons. In the first half of the year, the company's Inner Mongolia Phase I 100000 tons of high-purity polysilicon project climbed smoothly, driving the total production capacity to 205000 tons. In the first half of the year, the company completed polysilicon production of 79000 tons, Q1 and Q2 of 3.4 and 45000 tons respectively. In terms of cost, the price of industrial silicon fell after the Spring Festival, and the unit costs of Q1 and Q2 were 53.45,50.34 yuan / kg respectively. Looking forward to Q3, the company expects to complete production of 5.5-57000 tons in the third quarter and 19.3-198000 tons for the whole year. In the future, with the stable full production of Baotou Phase I, the full cost is expected to be reduced to less than 50 yuan / kg, even if the average tax price of silicon material falls to 70 yuan / kg, it can still maintain a net interest rate of more than 15%.

Silicon bibcock continues to promote production expansion, Baotou Phase II accelerated construction. At present, the company's production expansion plan is mainly concentrated in Baotou. The first phase of the project (100000 tons of polysilicon + 1000 tons of semiconductor polysilicon) was launched in the first quarter of 2022 and put into production in the second and third quarters of 2023 respectively. The second phase (100000 tons of polysilicon) was officially launched at the end of 2022 and is expected to be completed and put into production by the end of 2023, that is, the company's polysilicon production capacity will exceed 300000 tons by 2024, a solid leading position.

Profit forecast

We estimate that the return net profit of the company in 2023-2025 will be 55.28 PE 4.429 billion yuan respectively, corresponding to the company's 15.33x/22.79x/19.13x in 2023-25, covering for the first time and being rated as "overweight".

Risk Tips:

The demand for photovoltaic installation is lower than expected; the competition pattern is worse than expected.