Report summary:
The company proactively lays out heterojunction batteries. Dongfang Risheng was founded in 1986, successfully listed on GEM in 2010, and launched a 4+5GW heterojunction battery project in 2022, gaining a first-mover advantage. Coupled with the decline in silicon prices in 2023 and the company's excellent cost control, the company achieved revenue of 280.2 billion yuan from 2023Q1-3, an increase of 33.27%, and net profit of 1.28 billion yuan to the mother, an increase of 71.18%.
PV installations have reached new heights, and various technologies are developing rapidly. We expect new global and domestic installations to reach 400GW and 200GW respectively in 2023. Domestic distributed photovoltaics have increased by more than 50% for two consecutive years, and the space is vast. After the “14th Five-Year Plan”, China's new energy construction plans were gradually clarified, and clean energy bases progressed steadily in batches, leading to strong demand in the photovoltaic market. In 2023, polycrystalline silicon production capacity was released, silicon material prices fell, N-type battery market share continued to rise, leading to cost reduction and efficiency, and structural repair of profit margins on the module side.
Heterojunction efficiency is leading. We estimate that the current average non-silicon cost in the HJT industry is close to 0.24 yuan/w. PERC batteries are already close to the efficiency limit. N-type batteries are a development trend. Dongfang Risheng 210 size heterojunction modules have an efficiency of over 700W, ahead of other N-type technologies, and have stronger lamination capabilities. The company launched the Fuxi module. The efficiency and thickness indicators are superior to PERC, and the silver paste consumption and battery interconnection temperature are superior to traditional heterojunctions. Currently, the company has used 110 μm210 silicon wafers in mass production, and the efficiency has reached 25.5%. According to our estimates, the average non-silicon cost in the heterojunction industry is close to 0.24 yuan/w. In the future, cost reduction technology will continue to develop, and heterojunction and PERC costs are expected to level out. The company's heterogeneity is leading in terms of scale, efficiency and cost. Coupled with strong overseas channels and component premiums, the future volume will be more profitable.
The company has entered the energy storage race track, and the Double One Force brand has thrived. In 2018, the company acquired 90% of Tianjin Shuangyili's shares to enter the energy storage circuit. The company founded Ningbo Shuangyili, focusing on integration with energy storage systems and the manufacture of battery module packs. Currently, it has obtained UL certification and established stable customer channels in the US. US shipments account for 50% of total energy storage shipments. The company has signed strategic cooperation agreements with SMA, Haichen Energy Storage, etc., and Dongfang Risheng's energy storage business has sufficient order reserves, and the future of energy storage can be anticipated.
Profit forecast: Energy storage and heterojunction two-wheel drive company growth. It is estimated that the company's revenue for 2023-2025 will be 440/ 575/ 70 billion yuan, respectively, and net profit for 2023-2025 will be 19.0/ 26.5/3.43 billion yuan respectively, and the corresponding PE will be 11/8/6 times, respectively. 2023E was given a profit 15 times PE valuation, corresponding to the target price of 25 yuan, maintaining the “buy” rating.
Risk warning: Heterojunction falls short of expectations; profit forecasts and valuation models fall short of expectations