An established photovoltaic silver paste company, technological change meets opportunities. Dike Co., Ltd. was founded in 2010. It is a leading enterprise in the field of silver paste for crystalline silicon solar cells in China, leading the localization of solar silver paste. The chairman of the company has rich industry research experience and excellent professional technology. The chief technology officer was the chief researcher at Samsung SDI.
The chairman and his mother are the actual controllers of the company, and the management structure and shareholding structure are stable. PV silver paste has accounted for more than 90% of revenue over the years. After entering 2023, benefiting from changes in battery technology, the company's performance increased rapidly. Revenue reached 9.603 billion yuan, an increase of 154.94% over the previous year, and turned a loss into a profit, achieving a net profit of 386 million yuan to mother.
The N-type era space opens up, and the share is expected to be more concentrated
As an important auxiliary material in the cell process, photovoltaic silver paste has a great influence on the non-silicon cost of cells and is directly related to the conversion efficiency of solar cells. The silver paste process has the characteristics of being light on assets. The paste formulation is critical and requires long-term R&D and optimization to suit different downstream products. Silver powder, the core raw material, is a bulk product. The price fluctuates greatly, and the production cycle of silver paste products is short. The silver paste industry mainly earns processing fees, which places certain requirements on the capital management ability of silver paste companies. N-type batteries in downstream products require higher silver paste. As the proportion of N-type batteries increases, it opens up demand space for the silver paste industry. According to estimates, it is assumed that global battery production will be around 680 GW in 2024, the unit silver consumption of P-type batteries and TopCon batteries will drop slightly, and HJT will increase to about 65% due to the significant drop in silver consumption per unit of 0BB and silver-coated copper, which corresponds to the market demand of more than 6800 tons of silver paste, with a demand growth rate of nearly 30%, and is expected to maintain a growth rate of about 20% in 2025. As TopCon becomes mainstream in 2024, LECO is expected to become a key efficiency improvement technology for the next generation of TopCon in pursuit of efficiency improvement and cost reduction, and also puts forward new requirements for silver paste formulations. The silver paste industry is highly concentrated. As N-type batteries iterate on silver paste products and increase in response speed requirements, the industry share is expected to be further concentrated in the lead.
Seize the wave of technology, and profit can be expected to increase
Dike Co., Ltd. began research in the field of silver paste in 2010, and has gone through the technology iteration cycle to become an industry leader with leading product performance.
In the current transition period from type P to type N, the company made efforts to conduct silver paste for N-type batteries. In 2023, TopCon silver paste shipped 1008.5 tons, and the share of shipments increased to 58.85%. In the future, it is expected to further increase the share of TopCon silver paste shipments and strengthen its leading position in the market. Based on the performance-oriented characteristics of the silver paste industry, the company continues to strengthen international R&D team building, increase R&D investment, drive product innovation, develop DK72E series TopCon battery P+ emitter laser-enhanced sintering special conductive paste and supporting DK82e main grid paste, and pioneered the introduction of LECO in 2023Q4 to seize market opportunities. At the same time, the company extended the layout of silver nitrate and metal powder upstream to reduce costs while improving R&D capabilities. In addition, the company is also expanding non-photovoltaic fields such as semiconductor chip packaging pastes, diversifying product categories, optimizing the customer structure, transitioning to a large customer base, and achieving rapid revenue growth.
Profit forecasting and investment advice
We expect the company to achieve net profit of 630 million yuan in 2024, which is 13 times the corresponding PE, covered for the first time, and given a “buy” rating.
Risk warning
1. The progress of new battery technology falls short of expectations;
2. Increased industry competition;
3. Risk that profit forecasting assumptions are untrue or fall short of expectations.