Key points of investment
Incident: On May 21, Shijing Technology and Baowu Group joined hands to officially sign a carbon capture and industrial solid waste resource utilization project for Baowu Egang.
Signed a 300,000 ton steel slag carbon capture project and worked with Baowu Group to draw up a new blueprint for industrial carbon reduction. The Baowu Egang carbon capture and industrial solid waste resource utilization project is located in the factory area of Baowu Group Echeng Steel Co., Ltd. in Ezhou City, Hubei Province. It is planned to invest 144 million yuan to build a 300,000 ton steel slag pre-grinding system, a 300,000 ton steel slag carbon capture system, and an efficient composite mineral admixture mixing system with an annual output of 1 million tons. The company expects that after delivery, the project will produce 1 million tons of high-efficiency composite mineral blends per year, an annual profit of more than 25 million yuan, an annual tax contribution of more than 10 million yuan, and can directly capture and utilize 20,000 tons of carbon dioxide. Indirectly, by reducing the amount of cement clinker used in cement and the amount of cement used in concrete, the comprehensive carbon reduction will reach 250,000 tons. Cooperation between the company and Baowu Group in the field of industrial carbon reduction and resource recycling is expected to be further deepened after the project is implemented, and it is expected that the replication of carbon sequestration projects will accelerate.
Reducing pollution and reducing carbon coexist with economic benefits. The carbon market is expected to expand to the cement and steel industry, which is expected to drive the release of demand for carbon sequestration. The company innovatively uses non-carbon raw materials such as steel slag to capture flue gas CO2 at low cost. After carbon capture, steel slag becomes an auxiliary gelling material for carbon sequestration, which can be used in low-carbon cement production. At the same time, it can be mixed with other materials such as ore powder, fly ash, etc., to prepare an efficient composite mineral admixture. This material can be used in cement, concrete and other related industries. Its advantage is that the carbon capture cost is low and the terminal product has economic benefits, solving the problem of steel slag disposal while fixing carbon. The carbon market is about to expand and is expected to be incorporated into the cement, steel and other industries. On May 22, 2024, the quota price in the national carbon market rose to 100 yuan/ton. Based on this, it is estimated that the direct carbon reduction value of the 300,000 ton steel slag carbon capture project is 2 million yuan, and the comprehensive carbon reduction value is 25 million yuan, which is twice as flexible as the annual profit achieved on the product side. As carbon restrictions in the cement and steel industry are strengthened, it will drive the release of demand for carbon sequestration, and the benefits of carbon reduction are expected to be realized.
Leading photovoltaic process pollution prevention and control equipment, integrated layout of photovoltaic cell silicon wafers and new growth in carbon sequestration.
1) Abundant orders for environmental protection equipment: Since 2023, the company has announced a total winning bid of more than 12 billion yuan (including consortia). The integrated model & industrial chain extension capacity verification have rapidly increased the value of a single GW. 2) Integrated battery+silicon wafer layout: Plan a 24GW TopCon battery per year in Ningguo, Anhui, and a 20GW silicon wafer+20GW battery project in Ziyang, Sichuan. Among them, Ningguo's first phase of 18GW has already been put into production, the first one went offline on December 28, 2023, and the first phase of Ziyang's 10GW silicon wafer+10GW battery was laid to begin construction at the end of March 2024. The integration of silicon wafers and cells enhances competitiveness, and the collaboration of the original equipment business brings customer+cost advantages. 3) Demand for carbon sequestration is expected to accelerate: With the advantages of catalytic technology accumulated in collaboration with the main business, carbon sequestration projects can capture flue gas CO2, dispose of steel slag, and make resource-based construction materials at low cost, a win-win situation for all parties. As of 2024Q1, 2 lines have been completed and put into operation. As the carbon market expands, demand for carbon sequestration in cement steel will be released at an accelerated pace.
Profit forecast and investment rating: The company's abundant orders for supporting equipment guarantee the performance base. The commissioning of battery projects contributes to an increase, and demand for carbon sequestration is expected to accelerate. Considering the intensification of competition and the reduction in earnings per watt of batteries, we maintain our 2024-2026 net profit forecast of 676/9.62/1,151 million yuan, corresponding to 10/7/6 times PE, and maintain a “buy” rating.
Risk warning: Equipment orders fall short of expectations, increased industry competition, receivables risk, etc.