[investment points]
The company is an overall solution provider for industrial pollution control, benefiting from the continuous expansion of the photovoltaic industry and the rapid growth of the company's performance. The company's existing business is mainly to provide customized environmental protection equipment and services for pan-semiconductor industry and heavy industry, including process pollution prevention and control equipment and end pollution control equipment. Products are widely used in photovoltaic, optoelectronic and other pan-semiconductors and heavy industries such as steel and cement. Benefiting from the continuous expansion of the photovoltaic industry and the rapid growth of the company's performance, the company achieved operating income of 1.433 billion yuan in 2022, an increase of 80.40% over the same period last year, and a net profit of 97 million yuan, an increase of 66.74% over the same period last year.
The demand for process prevention and control + end management is increasing, and the self-developed core technology is bound to mainstream customers. The N-type iteration of photovoltaic industry installed capacity superimposed battery technology promotes the high demand for photovoltaic process pollution prevention and control equipment. We estimate that the potential market space for photovoltaic cell and module environmental protection supporting equipment from 2023 to 2025 is 32.277 billion yuan and 23.425 billion yuan respectively. With the implementation of environmental protection policies and the continuous promotion of ultra-low emission transformation in the non-power industry, the demand for new environmental protection construction and environmental transformation in the steel, cement and other non-power industries is expected to attract more room for development. The company independently develops a series of core pollution treatment processes, such as LCR denitrification and pollution collaborative treatment, and has the leading technology in photovoltaic and heavy industry pollution treatment. As of September 23, the company announced that the 23-year new equipment order exceeded 5.3 billion yuan.
Based on the photovoltaic environmental protection equipment layout TOPCon, the main industry coordination + backwardness advantage is highlighted. The theoretical limit conversion efficiency of TOPCon battery is high, and the path of efficiency improvement in the future is clear. Although the power of the component end is slightly lower than that of the HJT, it has not yet formed an intergenerational difference, and the cost side TOPCon has an obvious performance-to-price ratio. Downstream demand, some central state-owned enterprise bidding projects N has accounted for more than 50%, TOPCon products in short supply and demand premium is obvious. The company's layout of TOPCon battery manufacturing has a significant synergistic effect, and with the maturity of equipment and technology, the advantage of backwardness is obvious. Synergy: 1) the company has been deeply engaged in the photovoltaic industry for many years, and the top ten photovoltaic module manufacturers in the world are all stable customers of the company's environmental protection equipment, and the photovoltaic battery chip customers highly coincide with the company's original business customers; 2) the company has rich system design experience, which can avoid waste in construction and operation when designing the TOPCon battery factory system, and at the same time, combined with the company's pollution treatment technology, improve product yield and enhance product competitiveness. Advantage of backwardness: at present, the production technology and equipment of TOPCon battery are more mature, and the equipment selection at this stage can avoid the cost of trial and error, and at the same time, the production capacity, performance and stability of the equipment are higher.
CCUS emission reduction has a broad prospect, and carbon sequestration with steel slag has a bright future. CCUS technology is a feasible technical scheme for deep decarbonization in iron and steel, cement and other difficult emission reduction industries. According to the "China carbon dioxide capture, Utilization and Storage (CCUS) Annual report (2023)", it is predicted that the national CCUS emission reduction demand in 2025 will be about 2400 million tons / year, and the long-term demand will exceed 2 billion tons / year. The company uses steel slag to capture CO2 and prepare high-quality composite mineral powder to help enterprises reduce emissions and carbon while realizing the resource utilization of steel slag.
In November 2022, the company's first steel slag carbon sequestration production line has been put into production, while signing cooperation agreements with a number of enterprises, steel slag carbon sequestration business has great potential for development.
[investment advice]
We estimate that the operating income of the company from 2023 to 2025 will be 387, 14481, respectively, 21.377 billion yuan, the net profit of return to the mother will be 2.99, 10.10, and the EPS will be 2.08, 703, 10.28, respectively, and the corresponding PE will be as much as 22-6-4. With reference to peer valuation and considering the layout of TOPCon+ steel slag carbon sequestration business, the company will be given a "buy" rating of 10 times PE in 2024, corresponding to a 12-month target price of 70.3 yuan.
[risk Tip]
The company's capacity construction is not as expected, and the promotion of the second phase of the 6GW project of the company's TOPCon battery depends on the market situation. If the competition intensifies and TOPCon profits deteriorate, the company may postpone the construction of the second phase of the project.
Industry competition intensifies
Downstream demand is lower than expected.