Key points of investment

Benefiting from the recovery in particle prices and demand side, the company's performance is expected to be drastically repaired 1) Downstream enterprises will gradually increase in construction starts, and particle prices will pick up. Since the beginning of the year, particle prices have rebounded. According to Solbi PV data, the price of EVA particles was about 130 million/ton on March 6, 2024, up 17% from the beginning of the year. The price of white EVA film was 8.17 yuan/square meter; 2) Demand has picked up, and module production has increased dramatically. According to SMM data forecasts, the global module production schedule is expected to reach 54 GW in March 2024, an increase of 78.3% over February, and the component production schedule exceeds expectations.

2) The company's performance in 2023 is forecasted. Net profit attributable to shareholders of listed companies is expected to lose between 87 million and 99 million, mainly due to a decrease in the price of EVA particles and the selling price of adhesive film, a sharp decrease in the company's net profit, and impairment losses due to inventory calculation.

3) We believe that the dark days of photovoltaics are about to pass: the trilogy of asset impairment, inventory impairment, and poor operating losses is coming to an end. The current stock price has reflected a positive sign that most industries are weak and have bottomed out, waiting for the industry to pick up.

Tianyang New Materials: The leading domestic hot melt adhesive, photovoltaic film opens up room for growth 1) The company's PV film layout is accelerating, which is expected to increase its market share and greatly increase its profitability. The company is progressing in an orderly manner in the construction of photovoltaic packaging film projects such as Rudong and Hai'an. The Rudong production base is carrying out plant construction and equipment installation according to the plan. After delivery, the company's production capacity is expected to exceed 600 million square meters, providing an effective guarantee for the company's market share increase;

2) In the field of photovoltaic materials, the company has accumulated products and technology for more than ten years. The company's products cover EVA film, white film, POE film and EPE film, etc., and continuously optimizes product formulations to meet the technical needs of continuous downstream innovation. At present, the products have passed the certification of Tianhe Solar Energy and Jingao Technology to achieve small-batch delivery, and future supply volume is expected to increase; they have been supplied to important customers such as Zhengtai, Dongfang Risheng, GCL, and Yiyi.

The company develops various packaging solutions to meet the packaging requirements of different scenarios. For example, the launch of high-resistance PID products has accelerated the speed of product updates. Product structure optimization, 2023H1 component packaging for TopCon battery technology, and a significant increase in shipments.

Investment advice:

The company's net profit for 2023-2025 is expected to be 0.9, 1.0, and 340 million yuan, increasing 213% and 238% year-on-year in 2024-2025, corresponding to PE 24 or 7 times. Maintain a “buy” rating.

Risk warning

The company's expansion of production fell short of expectations, and industrial demand fell short of expectations.