The polymer material technology is leading, and the photovoltaic track rises abruptly based on its accumulated strength. The company takes the film shape functional polymer material as the core technology, and continues to expand its products and market. The company has been ploughing deeply in the field of photovoltaic backplane and plastic film for many years, the backplane industry occupies the leading position, and the plastic film business expands rapidly. From 2018 to 2022, the company's photovoltaic film revenue compound growth rate reached 127%. In 2022, the film business accounted for 51.3% of revenue, surpassing the backplane for the first time to become the company's largest source of income.

The rapid increase in global photovoltaic installed capacity is expected to drive the market demand for film. From January to June 2023, the newly installed capacity of photovoltaic power generation in China was 78.4GW, an increase of 154% over the same period last year. In 2022, the global demand for components reached 284.4GW, an increase of 33.2% over the same period last year, and the corresponding demand for plastic film was about 2.941 billion tons. Among them, the demand for components in China was 109.3GW, and the demand for corresponding film was about 1.13 billion tons. According to projections, the global demand for photovoltaic film will reach 6.351 billion square meters in 2025, with a compound growth rate of 31.9% from 2022 to 2025. In the future, the price of superimposed silicon material will gradually stabilize, and the downstream operating rate is expected to increase gradually, which will be good for auxiliary materials such as plastic film.

N-type batteries and double-sided components have become the mainstream of the market, and the company's POE film has obvious advantages. According to the China Photovoltaic Industry Association, the production capacity of N-type cells has been released one after another, and China's TOPCon production capacity is expected to exceed that of 300GW in 2023. The total proportion of N-type cells is expected to be as high as 86.1% in 2030, of which the TOPCon penetration rate is 42.5%. In 2022, global single-sided power generation components account for about 59.6%, and double-sided power generation components account for about 40.4%. Double-sided components are expected to surpass single-sided components to become the mainstream of the market in 2024. The company's TOPCon plastic film product matrix is rich, especially the single glass film has passed downstream customer tests one after another, the improvement of TOPCon permeability and the high market share of one-sided components make the company's film business gain space obvious in the short term; and in the future, with the continuous update of N-type battery technology and the improvement of market share of double-sided components, the company will promote transparent film to POE film and EPE film upgrade, the company is expected to continue to benefit from the industry technology change dividend. Comprehensive technical reserves, product richness, shipments and other aspects, the company for TOPCon components of the film business in the first echelon.

The future of HJT battery is promising, and UV light conversion film is the key technology of HJT battery. HJT penetration is expected to be 31.4% in 2030, making it one of the mainstream battery technologies. The company has the unique technology of high reliability light conversion material-hybrid molecule (radium), produces the best quality conversion film, and is widely recognized by the market. The core technology of the light conversion film is "light conversion agent", which is expected to be mass produced in China by the end of 23 years.

Backplane leading enterprise, the first KPf backplane market share. The company's independent research and development of fluorine film technology, the first KPf backplane, KPf backplane market share for 9 years in a row. Based on the modification of the original KPf backplane equipment, the composite backplane PPf and coated backplane FPf without adding PVDF film were developed. FPf backplane products have passed the component Jingke, Oriental Sunrise and Tongwei shares and other test certification, PPf backplane products passed the Jing O technology test in 2022, and the backplane products gradually entered the volume period. The company has newly developed high value-added products with high technical content, such as transparent grid backplane, transparent backplane, black high reflective backplane and high water resistance backplane, which are widely recognized by overseas markets.

The gain range of the black high reflective backplane is 1.5% more than that of the ordinary black backplane. The increase of overseas market in the future is expected to contribute to the company's revenue.

Non-photovoltaic materials business long slope thick snow, superimposed related products of the localization trend, the company may fully benefit. Non-photovoltaic business mainly includes SET/3C materials. SET (Semiconductor, Electric, Transportation) materials include materials used in semiconductors (including IGBT), electrical, transportation (including power lithium batteries); 3C materials include materials used in electronic and information products such as mobile phones and household appliances. In the means of transportation (including power lithium battery) for the company's main expansion of the track, the formation of the battery-PACK- vehicle link of the whole industry chain material layout, deeply bound to downstream leading enterprises, a number of subdivided product industries rank first in the market share. In the field of 3C and semiconductor materials, the company is expected to benefit from the acceleration of domestic substitution process, which can be expected in the future.

Investment advice: the company's backplane business continues to maintain a leading position in the world, and profitability is expected to stabilize and pick up by adjusting the backplane shipping structure; the company's film production capacity is expanding rapidly, TOPCon product matrix is rich, and it has passed a number of downstream tests. In addition, UV light conversion film is the first domestic launch, with the improvement of HJT battery permeability, the future is expected to fully benefit; in the non-photovoltaic field, the company takes polymer materials as the technical backbone, SET/3C field membrane materials continue to release, the future is expected to become the third performance growth curve, give a certain valuation premium. We estimate that the company's operating income from 2023 to 2025 will be 62.9% 860%, an increase of 53%, a year-on-year increase of 5.9%, a year-on-year increase of 65%, a year-on-year increase of 65%, and a current PE of 26.9% 12.9% 8.6 respectively. Cover for the first time, giving a "buy" rating.

Risk tips: photovoltaic installed demand is lower than expected, increased competition in the film industry, raw material price fluctuations, industry scale measurement deviation risk, research and reporting information is not updated in time, technological change and other risks.