Positive silver paste shipments are leading, and the scale advantage may continue to expand. Juhe Technology's main products are silver paste for the front side of photovoltaic cells, including TopCon's complete set of four silver pastes, X-BC conductive silver paste, HJT master+fine grid silver paste, etc. From the supply side, the company's Changzhou plant originally had a silver paste production capacity of 1,700 tons. The second phase of production capacity expansion began in June 23, and was completed and achieved a production capacity of 3,000 tons at the end of September. Currently, the company's PERC photovoltaic silver paste market share is about 50%, TOPCON front silver paste market share is over 50%, and TOPCON products have an overall market share of over 30%. From the demand side, the company's top 12 customers account for more than 90% of revenue, and they are all leading listed companies in the industry. As the company's production capacity continues to expand, it is expected to further increase its market share and revenue scale through scale effects.
The upstream industrial chain layout is gradually taking shape, and cost reduction and efficiency have led to an increase in net profit. Silver powder is the main raw material for photovoltaic silver paste, and its price will be directly transmitted to the sales price of the company's products. The company completed the acquisition of Jiangsu Lianyin (now renamed Juyouyin) in June '23. Juyouyin is at the leading level in the country in terms of R&D and automated production of silver powder, and is expected to achieve a production capacity of 1,000 tons in 24 years. In addition, the company plans to invest 1.2 billion yuan to build a 3,000-ton electronic-grade silver powder plant in Changzhou, and plans to self-supply and ship 500 tons in 24 years. After the company achieves its own supply of 1,000 tons of silver powder, it is expected that there will be a net profit increase of about 100,000 yuan per ton of silver paste. In the long run, the company's upstream layout for silver powder can not only reduce the risk of being stuck in the neck by electronic grade powder, but also guarantee the stability of different batches of silver powder to ensure product quality.
Actively lay out overseas markets, and advance steadily on the R&D and production side. Polymeric Materials is the first domestic photovoltaic silver paste company to build a factory overseas. At present, the company's factory in Thailand has been running smoothly, and official shipments began in November 23, with an annual output of 600 tons. The plant will mainly target overseas customers to meet their delivery needs and reduce foreign trade risks to a certain extent. Furthermore, the company registered a subsidiary, Juwa Technology, in Japan to set up an R&D center. The relevant foreign experts were already in place before the end of '23. With the steady development of the company's global strategic layout, the company is expected to further expand its overseas market share while improving its competitiveness.
Investment advice: We expect the company to achieve revenue of 163.67/204.65/23.130 billion yuan in 2024-2026, net profit to mother of 725/8.90/1,081 billion yuan, EPS of 4.38/5.37/6.53 yuan, respectively, and 13/11/9 times PE, covered for the first time, giving it a “recommended” rating.
Risk warning: Risk of PV installations falling short of expectations, risk of fluctuations in raw material prices, increased risk of market competition.