The strategy focuses on granular silicon and maintains the “buy” rating
According to the company's semi-annual report for 23 years, the company's 23H1 revenue was 20.946 billion yuan, an increase of 41.80%; net profit of 5.518 billion yuan, a decrease of 20.1 percent, of which Q2 revenue was 9.756 billion yuan, a decrease of 12.82%; net profit of 1,428 billion yuan, a decrease of 65.09%. Considering that the price of silicon materials is currently low in the cycle, and the rate of recovery in silicon prices is slowing down in the short term, we lowered the company's price of silicon materials in 23/24. We expect the company's net profit to be 83.12/53.59/6102 billion yuan (value 23-24 years ago: 126.79/12.754 billion yuan). Comparable, the average value expected by Wind in '23 is 8.09xPE. Considering that the silicon industry as a whole has entered a price reduction cycle, the company can maintain strong competitiveness with its cost advantage, so we The company was given 9xPE for 23 years, with a target price of HK$3.00 (previous value: HK$4.13) to maintain the “buy” rating.
Silicon production capacity was released quickly, and differentiated bets on granular silicon racing tracks
According to the company's semi-annual report for '23, 23H1 produced about 111,100 tons of polysilicon (including 824/28,700 tons of granular silicon/rod-shaped silicon), an increase of 177.1%. As of August 20, 2023, the company's total polysilicon output reached 113,500 tons, and total shipments reached 116,300 tons (including internal sales of about 11,800 tons). The company's three bases in Xuzhou, Leshan and Baotou have all achieved full production and sales, and an effective production capacity of 280,000 tons of granulated silicon has been achieved. Based on the increase in the company's granular silicon production capacity and the promotion of detailed optimization through customer feedback, transformation, and detailed optimization, the current feed ratio of downstream manufacturers using the company's granular silicon can be increased to 50%, and the company's granular silicon products account for more than 20% of the N-type supply share of domestic suppliers.
The cost advantage of granular silicon is remarkable, and product quality continues to improve
Currently, the company's granular silicon quality is rapidly advancing from solar grade to electronic grade, fully meeting the requirements of the N-type era. According to the company's semi-annual report for 23, the products produced by the company with a total granular silicon metal content of 0.5 ppbw and below already account for about 70% of the total granular silicon production, perfectly suited to customer needs in the N-type product era. With the current release of a large amount of N-type cell production capacity in the photovoltaic industry, it is expected that the price of high-quality N-type materials will be firmly supported in the second half of the year. According to the company's semi-annual report for '23, the production cost of the Leshan GCL granular silicon project is about 35.68 yuan/kg. The company's granular silicon cost advantage in the industry is remarkable, and the cost advantage is continuously expanding.
The market share of granular silicon continues to rise, and perovskite technology continues to advance
According to the company's semi-annual report for 23, as of June 2023, the company's granular silicon market share has exceeded 15%. Based on the continuous decline in granular silicon production costs, the market share is expected to continue to increase in the future. The company expects the market share of granulated silicon to exceed 30% in 2025. In terms of perovskite, the photoelectric conversion efficiency of the company's Kunshan GCL Optoelectronics 1m×2m, the world's largest perovskite module has exceeded 16%. The company expects to exceed 18% within the year. We are optimistic about the company's leading technical advantages.
Risk warning: The growth rate of new PV installations is lower than expected; risk of falling silicon prices; risk of falling gross margin.