Otherwise, the performance inflection point is expected to appear: in the early stage of the development of China's photovoltaic industry, the company broke the situation that photovoltaic polysilicon was monopolized by foreign enterprises and became the first local enterprise to mass-produce polysilicon. In 2011, Xiexin grew into a global leader in polysilicon materials and wafers, and began to lay out downstream photovoltaic power stations. The development of the company has been on a downward track after 2016, on the one hand, the company's polysilicon business has suffered significantly due to the switching of silicon wafer technology from polycrystal to single crystal, and on the other hand, the lack of subsidies for photovoltaic power stations has seriously dragged down the development of the company.
Since 2018, the company has lost money for three consecutive years. The company has launched a strategic adjustment to refocus on the photovoltaic polysilicon business. At present, based on the tight balance of silicon supply in the future, and the company's breakthroughs in granular silicon technology, we are optimistic that the company's performance in 2021 is expected to reverse the past decline and enter a new round of growth cycle.
The silicon material business is expected to usher in a new situation of rising volume and price: in the second half of 2020, there was a new round of production expansion in the photovoltaic market, and the capacity of downstream silicon wafers, battery wafers and components was greatly expanded. Due to the characteristics of heavy assets, long expansion period (about 1-2 years) and low capacity elasticity, silicon material expansion lags behind seriously. According to Solarzoom data, the total production capacity of domestic wafers, batteries and modules is expected to reach 370-400GW by the end of 2021, while the corresponding silicon production capacity is only 250GW level. At present, photovoltaic silicon has entered the price cycle, the tight balance situation is expected to continue in the future. The company's silicon bistatic strategy has become a global benchmark project for high-quality, low-cost polysilicon manufacturing, and the company is expected to significantly benefit from the trend of tight balance between supply and demand in the industry in 2021.
Granular silicon technology, sharp sword needs to be polished: compared with the current market mainstream improved Siemens process, FBR granular silicon technology has the advantages of low energy consumption and continuous production, and is expected to become the next generation of photovoltaic silicon technology. Since 2010, the company has spent many years independently developing granular silicon technology, and has achieved stable mass production through the acquisition of overseas assets. The company's granular silicon products are an effective supplement to the mainstream bar silicon in the market, and quality verification has been achieved in downstream customers. at present, Xuzhou granular silicon 10,000 tons project has been officially put into production, and the future development is worth looking forward to.
Profit forecast, valuation and rating: we predict that the company's net profit from 2020 to 2022 is-16.38,20.98 and 3.216 billion yuan respectively, corresponding to EPS of-0.08,0.08,0.13 yuan. We select two Hong Kong comparable companies that are both photovoltaic companies, and according to the relative valuation method, we give Poly Xiexin Energy a target price of HK $4.10 (PE is 27x in 2022). Based on the tight balance of silicon supply in the future and the company's breakthroughs in granular silicon technology, we are optimistic that the company's performance in 2021 is expected to reverse the past decline and enter a new growth cycle, so we give it a "buy" rating.
Risk hints: industry fluctuation risk; order fulfillment risk; risk of loss of core technical personnel; risk of technology substitution, underproduction of fund-raising projects, etc.