Event: The company announced its 2023 interim results. In 2023H1, the company achieved revenue of 20.946 billion yuan, an increase of 41.8% over the previous year; net profit of 5.518 billion yuan, a year-on-year decrease of 20.1%.
Production capacity is gradually being released, and market share is gradually increasing. 2023H1 produced a total of 111,100 tons of polysilicon, an increase of 177.1% over the previous year, of which the production of granular silicon was 82,400 tons, an increase of 634.3% over the previous year, and the production of rod-shaped silicon was 28,700 tons. The company continues to promote the construction of granulated silicon production capacity. The total production capacity of granulated silicon projects already in operation and under construction has reached 400,000 tons. As of June 30, 2023, the Group's annual polysilicon production capacity was 240,000 tons, all of which was granular silicon production capacity. Among them, Xuzhou Zhongneng, Leshan GCL, and Baotou Xinyuan projects had an annual production capacity of 80,000, 100,000, and 60,000 tons, respectively. According to the company announcement, as of the interim results report date, the company's effective production capacity of granulated silicon at its three bases reached 280,000 tons, and the market share increased from 10.3% at the end of 2022 to more than 15%. Affected by the industry's downturn cycle, the average sales price of 2023H1's polysilicon without tax is about 124.1 yuan/kg. The company improved its ability to control costs. In June 2023, the company's average granular silicon manufacturing cost decreased by 41% compared to the end of 2022. In July 2023, the production cost of the Leshan GCL granular silicon project was about 35.68 yuan/kg. The gross margin of the company's 2023H1 photovoltaic materials business was 41.9%, down 6.1 pct from the previous year.
Product quality has improved and market demand has increased. The quality of the company's granular silicon products continues to improve, and products with a total metal impurity content of less than 0.5 ppbw account for 70%. The company introduced turbidity measurements to indicate the powder content of granular silicon. In July 2023, the company's granular silicon products with turbidity below 120 NTU increased by 140% compared to the beginning of 2023. Furthermore, granular silicon is gradually meeting the needs of the N-type market in terms of indicators such as low child life and yield. The company's products were gradually recognized by the market. 2023H1's granular silicon shipments from the top three customers reached 23,000 tons, 14,500 tons, and 0.79 million tons respectively, accounting for 63.1% of total granular silicon shipments in the first half of the year. At present, the company's granular silicon products have been applied to more than 90% of monocrystalline customers, and leading companies have achieved 100% coverage.
Continued deployment of CCZ and perovskite technology. The company's CCZ single crystal pulling furnace has a yield of more than 185 kg/day, and has achieved a pilot production capacity of 200MW. As processes continue to be optimized and iterated, the advantages of combining granular silicon and CCZ technology will be further reflected in the N-type battery era. In terms of perovskite, the photoelectric conversion efficiency of the company's Kunshan GCL Optoelectronics 1mx2m, the world's largest perovskite module has exceeded 16%.
Profit forecast, valuation and rating: As the silicon industry has entered a downward cycle, our downgraded company's net profit forecast for 2023-2024 was 96.12 billion yuan and 5.933 billion yuan (previous values were 12.600 million and 14.474 billion yuan respectively), and the net profit forecast for 2025 was 6.147 billion yuan, corresponding to EPS of 0.36, 0.22, and 0.23 yuan for 2023-2025. The competitive advantage of the company's granular silicon products is gradually showing, and the CCZ and perovskite technology in the layout are expected to contribute to new growth space. We are optimistic about the company's future development prospects and maintain the “buy” rating.
Risk warning: risk of industry fluctuations; risk of order fulfillment; risk of loss of core technical personnel; risks such as technology replacement and project delivery falling short of expectations.