Deep ploughing in the field of Diamond Line, the performance will be improved in 2022. Founded in 2009, the company is the first domestic manufacturer to master the core technology of diamond line and put into production of diamond line on a large scale, focusing on the field of diamond line for 14 years. In 2022, the company achieved revenue of 643 million yuan, an increase of 137.42% over the same period last year, and a net profit of 91 million yuan, an increase of 216.43% over the same period last year.

In 2026, the potential demand of the global photovoltaic Kumgang line is expected to exceed 411 million km, corresponding to a market size of more than 13.5 billion yuan. Taking into account the further highlights of photovoltaic economic advantages, the future photovoltaic market is expected to maintain a high growth trend, we expect the global photovoltaic installed capacity is expected to reach 346.1, 381.1, 419.2 and 461.1GW in 2023-2026. Assuming that the volume ratio of silicon wafer is 1. 3 × 2023-2026, the wire consumption of diamond wire increases by 5.64% per year with the trend of thinning and thinning (the thickness of silicon wafer decreases by 5 μ m per year and the wire diameter decreases by 1 μ m per year), and the line consumption per GW is 60,63.38,66.95 and 707300 km respectively. Without considering the permeability of tungsten wire, the current diameter of carbon steel wire is close to the limit, and there is little room for refinement in the future. we assume that the unit price of diamond wire will be reduced by 1 yuan / km per year. It is estimated that the global market size of diamond line from 2023 to 2026 is 94.57 yuan, 106.75 yuan, 120.39 yuan and 13.566 billion yuan respectively.

The equipment technical transformation helps to reduce the cost and increase the efficiency, and the production capacity is released quickly. The company attaches importance to the independent research and development of production equipment, through the independent research and development of equipment and technical transformation, diamond line production equipment technology continues to improve. The industry-leading "20-line machine" was put into production in July 2022, and has now realized the comprehensive promotion and application of the industry-leading "20-line machine" equipment. The company has achieved remarkable results in reducing costs and increasing efficiency brought about by the technical transformation of the company's equipment. The company's unit production cost has dropped from 60.58 yuan / km in 2021 to 27.92 yuan / km in 2022.

With the capacity expansion of downstream wafer manufacturers, the company is actively expanding production to meet the needs of customers. By the end of 2022, the company has a production capacity of 36 million km / year, and it is expected that the production capacity will reach 72 million km / year by the end of 2023. In addition, the company issued a simple fixed increase announcement on August 17, 2023, intending to invest 58.6208 million yuan in the technical transformation of single-line machine. after the completion of the project, the existing single-line machine will be upgraded to "20-line machine", when the company's production capacity is expected to be further enhanced.

The company's fine wire products are at the forefront of the industry, and tungsten wire products have been gradually expanded. In recent years, the diamond line industry as a whole has shown a trend of thinning, and the industry average wire diameter has been refined from 65 μ m in 2017 to 38 μ m in 2022. The company's fine line R & D is at the forefront of the industry, and the product line diameter has always been lower than the industry average.

At present, the production line diameter of high carbon steel wire is close to the limit, and the company is actively developing tungsten wire diamond wire products. By the first half of 2023, the company has achieved large-scale supply of 30-32 μ m tungsten wire, and the smallest 27 μ m products have been supplied in small batches.

The acquisition of hydrogen energy, high-purity quartz sand companies, around the hydrogen, light upstream extension layout. On September 26, the company issued a notice on signing an equity acquisition agreement, intending to use 245 million yuan to acquire a 70% stake in Hunan Lihui New material Technology Co., Ltd., and on August 7, the company issued an announcement. It is proposed to reshape the 35% stake in Shanghai New Energy held by energy and sound tax trade. Li Hui new material is mainly engaged in the field of high-purity quartz sand for quartz crucible; Yu Shangxin Energy is mainly engaged in the field of advanced carbon matrix composites. At present, the product with industrialization conditions has been developed as a high-performance carbon-based composite bipolar plate for hydrogen fuel cell.

Investment suggestion: the company has been ploughing the field of diamond line for many years and is a veteran manufacturer of diamond line in China. In 2022, the company achieved remarkable results in equipment technical reform, and the scale of production capacity was greatly improved, taking into account the fact that the company's thin-wire product research and development was at the forefront of the industry and the accelerated production expansion process of downstream wafer manufacturers, superimposed with the improvement of the permeability of high-value tungsten wire. It is estimated that the company's operating income from 2023 to 2025 will be 16.76,23.34 and 2.917 billion yuan respectively, an increase of 160.8%, 39.3% and 24.9% over the same period last year, and the net profit of 2.86,3.95 and 486 million yuan respectively, up 214.5%, 38.1% and 23% over the same period last year. The corresponding EPS is 1.27,1.76,2.16, and the corresponding PE is 12.8,9.3,7.5 times. Cover for the first time, giving a "buy" rating.

Risk hints: the risk of raw material purchase price fluctuation, the intensification of industry competition, the lower-than-expected permeability of tungsten wire, and the failure of photovoltaic installation.