Incident: The company achieved operating income of 4,056 million yuan, an increase of 97.15% over the previous year; achieved net profit attributable to shareholders of listed companies of 440 million yuan, an increase of 67.09% over the previous year; achieved net profit of 421 million yuan after deducting non-recurring profit and loss attributable to shareholders of listed companies, achieving basic earnings of 0.22 yuan per share. The performance was in line with expectations.
Performance has increased dramatically, and there is still room for improvement in gross margin levels. In 2020, benefiting from the rapid development of the photovoltaic industry, the company's successful development of large-scale monocrystalline furnaces and the commissioning of large-scale silicon wafer production capacity, the company's performance achieved rapid growth, achieving operating income of 4,056 billion yuan, an increase of 95.17% over the previous year. The company's overall gross margin level was 32.58%, a year-on-year decline. The company's silicon sector gross margin level is 16.66%, which is lower than the average of peers. The main reason for this is that the Wuhai New Materials Industrial Park silicon wafer project in the first half of 2020 was in the stage of climbing production capacity. After production capacity gradually increased in the second half of 2020, the gross margin level of this business has risen to a normal level. In the future, as the company's fine management level of silicon production increases, gross margin is expected to increase further.
Benefiting from the increased penetration rate of monocrystalline technology in the industry, the company's monocrystalline silicon furnace shipments increased rapidly.
Downstream demand in the photovoltaic industry was strong in 2020, with global installed capacity exceeding 130 GW. Under high demand, major silicon wafer manufacturers have expanded production one after another. Global silicon wafer production capacity increased from 185GW in 2019 to 280 GW in 2020, an increase of 51% over the previous year. The penetration rate of single crystals further increased, and the monocrystalline market share increased from 65% in 2019 to 85% in 2020. The company's monocrystalline furnace product level is leading the industry. Under strong downstream demand, the company's monocrystalline silicon furnace sales volume reached 472 units in 2020, with a year-on-year increase of 1,866.67%. The company's high-end equipment business achieved revenue of 612.032,200 yuan, a sharp increase of 1,860.31% over the same period last year.
Expand the industrial chain vertically and accelerate the layout of large-scale silicon wafers. The company's business covers four major industries: high-end equipment, new materials, new energy power generation, energy saving and environmental protection. In the photovoltaic industry chain, in addition to upstream equipment and downstream components, in recent years, the company has begun to accelerate the deployment of silicon wafers. In 2020, the company's silicon wafer production capacity was about 7 GW, and the number of silicon wafers shipped 1,016 million pieces, an increase of 135% over the same period last year. The company's new materials business achieved revenue of 1,814 million yuan, a sharp increase of 216.01% over the same period last year.
In 2021, the company will focus on promoting the first phase of the 12GW drawing rod cutting project in Leshan and the 10GW high-efficiency monocrystalline silicon rod project in Wuhai. The advance layout of large batteries and the investment of advanced production capacity will enable the company to continue to maintain the competitiveness of its products on the market side and push photovoltaic modules into the high-power era.
Independent research and development, seizing opportunities for industry technology iteration. Improving efficiency and reducing costs of “large” silicon wafers has become an industry consensus. The use of large high-power modules can greatly reduce the amount of downstream brackets, cables, and inverters used, thereby effectively reducing the cost of electricity used in photovoltaic power generation. It is expected that in 2021, the market share of large silicon wafers will explode, and the trend of large silicon wafers will be further strengthened. In 2020, the company independently developed the JD-1600 furnace and diamond wire slicer products, which are suitable for the production of products such as 12-inch silicon rods and 210 silicon wafers. At the same time, the industry chain was extended to silicon manufacturing to accelerate the layout of large-size silicon wafers. In the future, the company is expected to fully enjoy the dividends of technological change, seize market opportunities, and have card position advantages.
Taking into account the impairment, young attire entered the battle in 2021. The company carried out a comprehensive inventory of various types of inventory, receivables, fixed assets and other assets in 2020, and fully assessed and analyzed the net realizable value of various types of inventory, the possibility of recovery of accounts receivable, and the realizability of assets such as fixed assets. The calculated impairment reduced the company's net profit in 2020 by 51.13 million yuan. After the impairment is completed, the company is expected to go lightweight and embark on the fast track of large-scale monocrystalline development.
Investment advice: We expect the company's net profit to be 12.35/20.33/2,782 billion yuan in 2021/2022/2023. Corresponding to the current PE of 14.2/8.6/6.3, respectively, we will give a purchase rating.
Risk warning: In 2021, downstream installation demand fell short of expectations; the company's expansion growth rate did not meet expectations; fluctuations in upstream silicon prices led to a sharp increase in costs.
