Tongwei (600438) Commentary Report: Counter-cyclical Expansion of Production and Expansion of Silicon Materials and Cell Leadership

Tongwei (600438) Commentary Report: Counter-cyclical Expansion of Production and Expansion of Silicon Materials and Cell Leadership
Event: On February 12, 2020, the company announced a mid-term (2020-2023) development plan for the high-purity crystalline silicon and solar cell business, planning for future expansion and battery cell capacity expansion, and by 2023, the annual cell cell capacity will reach22-29 is expected and 80-100GW.And from March 2020, it is planned to invest in Chengdu Jintang to build 30GW high-efficiency solar cells and supporting projects. Comment: The battery production line is constructed with M12 specifications, non-silicon costs lead the industry, and large-scale application of HJT is coming: Tongwei Jintang 30GW battery chip projects are all designed and constructed with M12-210mm silicon wafer size, and are compatible with 166, 163, and 158.For 156 and other silicon wafer specifications, due to the use of 210 large-size equipment, even if the investment in a single equipment increases, the production line capacity increases by 55%, but the single GW investment decreases.If PERC + or TOPCON equipment is included, the total investment for Phase 1 and Phase 2 15GW single-crystal PERC production lines and supporting facilities is USD 8 billion, and the investment per single GW is only 5.3.3 billion.The efficiency of the company’s single crystal PERC battery 四川成都耍耍论坛 is more than 23%. When superimposed with PERC + or TOPCON, the efficiency can reach 24-24.5% increase in efficiency and decrease in investment, combined with the company’s continuous process improvement and refined management, the non-silicon cost of the battery chip will drop to zero.18 yuan / watt, most non-silicon cost of most battery companies in the industry is as high as zero.3 yuan / watt, continue to highlight leading industries.Jintang Phase III and Phase IV 15GW battery chip production line plans to adopt HJT process after domestic equipment matures. The existing company’s 400MW HJT pilot production line test runs normally. It is expected to cooperate with equipment companies in two to three years to apply HJT on a large scale. Silicon material prices have stabilized and are expected to rebound, Tongwei ‘s cost advantage 重庆耍耍网 has expanded, and production expansion has squeezed the market share of high-priced silicon materials: Recently, South Korean silicon material manufacturer OCI was forced to stop production of South Korea ‘s 5-output production line due to price pressure.2 The cutting-edge production line was transformed into an electronic grade.In 2019, the price of silicon materials expanded from US $ 10 million to 7 million tons / ton, and many high-cost production lines were overwhelmed and stopped production.In terms of demand, overseas photovoltaic demand has continued to grow, and domestic growth has largely resumed in the past 20 years. Demand is good. Domestic silicon material prices have stabilized, and there may be a rebound when the peak season comes.The total cost of the Tongwei Leshan and Baotou production lines is less than 5 million tons / ton, and the proportion of silicon materials for single crystals is close to 90%. It still maintains profitability in the case of most companies in the industry.The total cost of new production capacity planned in this announcement will be reduced to 4 million tons / ton, and designed and constructed according to the requirements of electronic grades. In the future, the proportion of silicon materials for N-type single crystals can reach 40-80%, which will greatly expand production and squeeze to account for high-priced siliconMarket share to enhance the company’s industrial level. Profit forecast and estimation: The current price of silicon materials and cells is still at a low level. Tongwei’s counter-cyclical production expansion is expected to squeeze the market share of high-cost products while expanding the leading edge while enjoying the industry development dividend.The EPS is expected to be 0 from 2019 to 2021.75/1.00/1.24, target price of 20 yuan, raised to “strongly recommended” level. Risk warning: major changes in domestic photovoltaic policies, product prices falling more than expected, etc.