Traditional manufacturing enterprises have been successfully transformed, and core technology has promoted rapid development.
The company's existing business is mainly concentrated in traditional manufacturing. In 2015, the company obtained graphene technology through acquisition and is committed to its R&D and application in related industries. After years of research, in September 2020, the company successfully used ingot monocrystalline silicon wafers to manufacture high-efficiency single-cast heterojunction batteries. The conversion efficiency was over 24%, the cost was greatly reduced, and the cost performance ratio was outstanding. Since then, the company has successfully transformed into a materials technology company, and will become a strong competitor in the domestic photovoltaic field in the future.
At the industry level: Carbon neutrality is accelerating prosperity, and reducing costs and increasing efficiency is the general trend.
Under the dual influence of policy guidance and technology driving, the national photovoltaic industry has entered the fast track, and photovoltaic power generation is expected to permanently change China's energy pattern in the future after fully entering the era of affordability. Due to the double impact of the epidemic and rising silicon prices, revenue from all sectors of the photovoltaic sector continued to grow across the board in 2020, making it very resilient. Silicon chips and batteries have benefited from the industry's continued growth, and the revenue chain has maintained a slight increase, but this cannot obscure the reality that their gross margin continues to decline. This also reflects the fact that while the photovoltaic industry is developing rapidly, the current profit margins of individual links in the industrial chain are already very limited, and a new round of technological innovation is on the way.
Currently, the mainstream battery technology in the industry is PERC batteries, but the space for cost reduction and efficiency is already very limited, and heterojunction technology is gradually becoming the focus of the industry with higher conversion efficiency. Junshi Energy introduced low silver consumption technology, which drastically reduced the single consumption of silver paste for heterojunction batteries made from G1 silicon from 150 mg to 80 mg. The cost of HJT batteries dropped from 0.982 yuan/W to 0.
896 yuan/W. If ingot monocrystalline technology is combined, the cost of HJT batteries may be lower than PERC batteries. Jinshi Energy's PEVCD equipment uses a large chamber and I-IN-P design, and has successively received orders for heterojunction equipment from Tongwei, Juneng Electric Power, and Jingao Technology.
We have always insisted on independent research and development, and the layout of new energy sources is gaining prominence.
The company has conducted many years of research and achieved major breakthroughs in technologies such as temperature field control, large-seed crystal technology, and post-processing of silicon wafers. A breakthrough was made in material technology, and the cost of silicon for silicon wafers was significantly lower than the cost of mainstream straight-drawn monocrystals. Moreover, single-cast silicon wafers can be used not only for today's mainstream PERC battery technology, but also for the next generation of TOPCON and HJT battery technologies. In September 2020, the Group's R&D team successfully developed new technology to manufacture high-efficiency HJT batteries using single-cast silicon wafers (conversion efficiency > 24%, certified by the TUV certification agency Fujian Institute of Metrology).
The company reduced capital expenses by acquiring and modifying existing idle ingot furnaces in the market. Currently, 290 ingot furnaces from GCL have been purchased. The company cooperated deeply with Junshi Energy. The company cooperated with Junshi Energy to develop the heterojunction battery business using asset-light methods of equipment leasing and technical licensing. In June and July 2021, the company successively signed orders for 200 million silicon wafers with Runyang and 100 million single-cast silicon wafers with Taiyi Photovoltaic and Panda PV respectively. The company successfully commercialized the company's monocrystalline ingot silicon wafers, achieved deep progress in business transformation, and received approval from the world's leading photovoltaic cell manufacturers. Production and sales will soon be booming in the future.
First coverage, giving a “buy” rating. We expect the company's revenue for 2021-2023 to be 971 million yuan, 6.172 billion yuan, and 7.988 billion yuan respectively; +746.56%, +535.67%, +29.43%, respectively; the net profit of the mother is 209 million yuan, 1,707 million yuan, and 2,047 million yuan respectively, +292.30%, +716.40%, +19.87%, respectively; EPS is 0.13 yuan, 103 yuan and 1.24 yuan respectively. In terms of valuation, since the company's current book business is still dominated by the old business, and the new business has not been reflected in the financial statements in a timely manner, the market value is seriously underestimated. I'm optimistic about the company's growth space in the future. The company's traditional business accounts for a relatively small share. By allocating various expenses to various businesses and excluding the impact of losses from Baoren products, it can be estimated that the net profit of the ingot monocrystalline silicon wafer business in 2021 was about 168 million yuan. Referring to the silicon wafer business, the average valuation level of the company's ingot monocrystalline silicon wafers was estimated at about 33.5 billion yuan in 2022 according to the calculation of PE 20 times. First coverage, giving a “buy” rating.
Risk warning: The risk of policy changes and industry fluctuations in the photovoltaic industry; the risk of weakening technological leadership; the risk that industry competition intensifies and the company's sales volume and gross margin fall short of expectations; the risk that the sales price of photovoltaic cells falls short of expectations; the risk that production capacity falls short of expectations; the risk of insufficient capital and the risk that production cannot be rolled out; the risk of fluctuations in raw material prices, public information used in research reports may be delayed or not updated in a timely manner.