Granular silicon technology dividend release, benefit from N-type demand has a broad prospect. The company is a leader in the layout of silane fluidized bed granular silicon products. compared with rod silicon, the company's granular silicon products have the advantages of low cost and low carbon footprint. By the first quarter of 2023, the company's Xuzhou base granular silicon cash cost 34.2 yuan / kg, production cost 40.2 yuan / kg, the cost advantage has been gradually realized; by the end of 2022, the proportion of the company's granular silicon total metal content ≤ 1ppbw products exceeds 75%, which meets the requirements of N-type silicon wafers; certified by French institutions, the PERC components using granular silicon have reduced carbon emissions by about 10%, 20%, compared with similar products, and the low-carbon advantage is significant. In the future, granular silicon will fully benefit from the increased demand for N-type and low-carbon footprint components at home and abroad, and has a broad application prospect.
The concentration of polysilicon industry is high, and the proportion of granular silicon is expected to increase. Silicon links are highly concentrated, with industry output CR5 rising from 61 per cent in 2019 to 77 per cent in 2022. Among the top ten enterprises in global polysilicon production in 2022, the top four are Tongwei, Xiexin, Daquan and Xinte. In 2022, the proportion of rod silicon was 92.5%; the market share of granular silicon increased to 7.5%. With the improvement of production process and the expansion of downstream applications, the market share of granular silicon is expected to further increase.
CCZ technology has the advantages of high output, low cost and uniform resistivity, which meets the requirements of N-type silicon wafers. The company's deep layout continuous Czochralski monocrystalline silicon (CCZ) technology research and development, the company's CCZ single crystal furnace per unit output can reach 185kg/ days, has achieved the pilot-scale production capacity of 200MW. Compared with the cycle production of RCZ, CCZ has the advantages of high output, low cost and good longitudinal resistivity consistency of silicon rods. With the large-scale promotion of N-type large-diameter single crystals, the advantages of CCZ may be further highlighted.
Large-size perovskite components achieve large-scale mass production with high conversion efficiency. The world's first 100MW production line built by Xiexin Optoelectronics, a subsidiary of the company, has completed plant and major hardware construction in Kunshan in 2021 and has been in stable operation for nearly 2 years. The production line produces perovskite components of the world's largest size of 1m × 2m, and its efficiency has exceeded 16%. By the end of 2023, it is expected to exceed 18%, leading the industry in mass production and conversion efficiency of large-size components.
Investment suggestion: from 2023 to 2025, we expect the company to achieve operating income of 319,000,000 yuan, 327,000,000 yuan, year-on-year-11%,-11%, 2%, 12%, and net profit of 71.3%, 65.3%, 8.34 billion yuan, respectively. Compared with the same period last year, the current stock price corresponds to 5.0 PE 5.5, 4.3 times the current stock price. Taking into account the FCFE valuation and relative valuation, we believe that the reasonable valuation range of the company's share price is 1.54-1.59 yuan, or about HK $1.65-1.70, corresponding to the dynamic PE range of 2023, which is 16% premium to the company's current share price. Coverage for the first time, giving a "overweight" rating.
Risk tips: the risk that the production and sales of photovoltaic silicon materials fall short of expectations; the risk of intensified competition in the industry; and the risk that the company's reduction is not as good as expected.