Incident: The company issued an announcement to establish a holding subsidiary Okeyi New Energy to invest in the construction of a 10 billion meter tungsten wire production line, with a total project investment of 145 million yuan. The target company has a registered capital of 50 million yuan, of which the company invested 34 million yuan, accounting for 68% of the registered capital; Zhuzhou Oudong Investment Partnership (limited partnership) invested 16 million yuan, accounting for 32% of the registered capital.

By saving silicon material, improving the yield of silicon wafers, and adapting to the development of silicon wafer thinning, tungsten diamond wire has become a trend to replace carbon steel diamond wire. Compared with carbon steel busbars, the breaking strength of tungsten wire busbars is higher, 1.2-1.3 times that of carbon steel of the same specification. Therefore, under the same breaking force conditions, the theoretical wire diameter of tungsten wire can be thinner. This is the core advantage of tungsten wire replacing carbon steel as a diamond wire bus. Because: 1) The smaller the diameter of the diamond wire, the greater the amount of silicon wafers produced under the same amount of silicon material, which can save silicon; 2) the smaller the wire diameter can reduce the appearance of impurity wire marks caused by diamond wire and improve the yield of silicon wafers; 3) the thickness of the silicon wafer is reduced by 5 um, and the consumption of single silicon wafers can be reduced by about 3%. Under the pressure of high silicon costs, silicon wafers will accelerate towards thinning after 2021. The mainstream thickness of silicon wafers dropped from 170um in 2021 to 150um in 2023, and the finer the diamond wire diameter, the smaller the silicon wafer's energy. The difficulty of thinning development.

Global demand for photovoltaic installations continues to rise, demand for diamond wire continues to expand, and the size of the tungsten wire market accelerates as the penetration rate increases. In 2023, the global PV installed capacity was about 390 GW, up 67% year on year, reaching a record high; global silicon wafer production was about 681 GW, up 79% year on year. Based on the calculation that a single GW silicon wafer wire consumes 500,000 kilometers, the global demand for diamond wire in 2023 is about 340 million kilometers. With the development of the global photovoltaic industry, demand for diamond wire will continue to rise, and the market space for photovoltaic tungsten wire will continue to expand.

Currently, tungsten wire is in the early stages of development, and the company's layout timing is good. The large-scale development of photovoltaic tungsten wire began in 2022. As of now, the core leader is the Xiamen tungsten industry, which sold 76 million kilometers in 2023. Other participating companies, such as Chinatungsten Hi-Tech, Xianglu Tungsten, and Meichang Co., Ltd., have yet to achieve large-scale mass production. The company has entered the photovoltaic tungsten wire market at this time and is still in the early stages. If mass production is successful, the performance will clearly benefit from the development of the photovoltaic tungsten wire industry.

Profit forecasting and investment advice. The company's net profit for 2024-2026 is estimated to be 2.0, 2.8 billion yuan, and 390 million yuan respectively. The compound net profit growth rate for the next three years is 33%, maintaining a “buy” rating.

Risk warning: the risk of macroeconomic fluctuations, the risk that overseas market expansion falls short of expectations, and the progress of tungsten wire projects falls short of the expected risk.