The silicon wafer growth curve was realized, and the “gain” rating was maintained
According to the company's 23 annual report, the company's net profit for 23 years was 1,502 billion yuan, an increase of 57.06%; after deducting non-net profit of 1,343 billion yuan, an increase of 49.53% over the same period last year, a significant increase in the volume of the company's silicon wafer business, and energy-saving and water-saving equipment was comprehensively driven by downstream demand for energy saving and emission reduction. However, due to the sharp drop in silicon wafer prices since 23Q4, the company's silicon wafer business turned into a loss. According to the company's quarterly report for '24, the net profit loss to mother was 295 million yuan. Considering that the decline in silicon wafer prices is dragging down profits, we lowered the company's 24/25/26 EPS to 1.09/1.29/1.42 yuan (previous value: 1.49/1.82/-yuan). Referring to Wind's unanimous expectations, it is comparable to 6.30 times the company's PE in 24 years. Considering the imminent release of the company's green electricity hydrogen production equipment, the growth curve is prominent, and the demand for traditional equipment business is increasing. The company was given 8 times PE in 24 years, corresponding to the target price of 8.72 yuan (previous value: 11.11 yuan), maintaining the “increase” rating.
The company's silicon wafer production capacity is being released steadily, but prices in the silicon wafer industry are under pressure
According to the company's announcement, at present, the company's Baotou Phase 1 and 2 production capacity has been put into operation. The design capacity is 38 GW, the actual output was 44 GW in '23, and sales were 44.6 GW. The sales volume also increased by 184.96%, achieving a rapid increase in output. On the industry side, falling prices in the industrial chain led to serious pressure on silicon wafer prices, putting pressure on the company's profits, causing net profit to turn negative in 24Q1.
Hydrogen production is expected to create new growth
In terms of hydrogen production, according to the company's announcement, the first phase of the company's Green Power hydrogen production project has been completed and put into operation, with an annual production capacity of 300 electrolyzers. The JSDJ S1 series alkaline water electrolyzer with independent intellectual property rights has been strongly promoted to the market, and is making breakthroughs in domestic and overseas markets, as well as in the Middle East, Europe, etc. In terms of long-term planning, the company has set an increase of 2.56 billion yuan to invest in a large-scale monocrystalline silicon crystal project and a construction project with an annual output of 700 sets of green power intelligent hydrogen production equipment to further expand the production capacity of hydrogen production equipment. We are optimistic that as demand for wind consumption gradually increases, the release of demand for hydrogen production equipment will effectively support the company's performance, and new growth will be realized.
Develop overseas markets, highlight business collaboration
According to the company's announcement, on January 17, the company won the bid for SPC's 100,000 ton monocrystalline silicon project in Middle East Oman to provide reduction furnaces, exhaust jacket tubes, green electricity hydrogen production and lithium bromide devices, with a bid amount of US$58.32 million. The bid was the company's first breakthrough in hydrogen energy equipment going overseas. It also reflects the strong potential of green power hydrogen production and environmental protection equipment in the photovoltaic market, giving full play to the competitiveness brought by the collaborative layout of the company's equipment business.
Looking backwards, the Middle East is a new blue ocean market for photovoltaics. Many photovoltaic manufacturers such as TCL Zhonghuan have plans to go overseas with production capacity in the Middle East. As an established equipment provider, the company is expected to open up new profit growth space by locking in orders for a full set of equipment.
Risk warning: Silicon wafer price fluctuations exceed expectations; downstream demand falls short of expectations, etc.