Tongwei shares (600438): from the profit cycle to see silicon material profit improvement

Tongwei shares (600438): from the profit cycle to see silicon material profit improvement
Introduction In the “Air Force One of the Research Series”, we reviewed and looked forward to the past, present, and future of the company’s battery business starting from the establishment of a battery smile curve.In this special study, we analyze the profit improvement of Tongwei’s silicon material in this cycle from the perspective of the silicon material exchange profit cycle. Silicon material: bottom of profit cycle, industrial technology dividend reappears from higher technical barriers and heavy assets, long capacity construction cycle, etc. We believe that the domestic silicon material profit cycle can be divided into four stages: 04-10 years technical barriersThe period of huge profits; the trough period of 11-13 years under supply-demand imbalance; the recovery period driven by the supply and demand in the first half of 14-18;At the current point in time, the silicon material profit cycle has bottomed out. The power and capacity of enterprises to expand production is weak. We believe that the silicon material profit cycle trend will be upward in the next 2-3 years.At the same time, the expansion of the price difference between single and poly crystals and the development of N-type batteries in the future will reappear using the industry’s technical dividends, and leading enterprises will earn significant excess returns. 北京夜网 Supply and demand: The overall supply is generally tight, especially in the second half of the year. We believe that the overall supply of silicon materials will be tight in the next half of the year, and the price will increase in the second half of the year: 1) The industry was basically full in December 19 and the operation was relatively good.Considering certain natural maintenance and small increments, it is estimated that the domestic silicon material output will be about 40 tons in 20 years; 2) Considering the increase in domestic supply and the suspension of some overseas production capacity, while excluding electronic grade silicon materials, it is estimated that about 9 years of imported silicon materials will be sintered in 20 years3) The above silicon materials are expected to support approximately 150 GW of wafer production, corresponding to approximately 157 GW of global wafer production.Considering manufacturing losses and over-allocation of generator components, it is estimated that the installed capacity can be about 130-140GW, and then 145GW under neutral expectations. Therefore, the supply of these silicon materials is expected to be tight, especially in the second half of the year considering the pace of demand. Tongwei: Following the upward profit cycle, technological advantages provide excess returns, and the company’s internal cost advantage has expanded due to its initial silicon raw material companies: 1) With more than ten years of intensive cultivation, its rich process accumulation and refined management advantages are prominent, and its company’s power consumption and material consumption are outstanding.Cutting-edge industries; 2) Through the joint venture with the chemical industry, a complete circular economy industrial chain is completed, and the industrial chain integration and synergy advantages are obvious.The company’s silicon material was affected by price fluctuations and new capacity climbing in 19 years. The profit level was at a historically low level. The profit level of silicon materials is expected to improve in 20 years: 1) The current new capacity has reached full production, and the corresponding rigid cost has been affected.Diluted, the cost will be gradually optimized; 2) the proportion of dense materials has also exceeded 80%, and subsequently gradually increased to more than 85%, and the structure is optimized to improve the overall quality of silicon materials;With a small increase, the profit level of silicon materials will further increase. We expect the company’s EPS in 19-21 to be 0.69/0.97/1.23 yuan, corresponding to PE for 20/14/11 risk tips: 1. Industry installations did not meet expectations; 2. Industry competition has intensified and prices have fluctuated more than expected.