预计21~22年归母净利润分别为66.1/70.4亿元，对应EPS分别为1.47/1.56元。考虑到光伏行业景气上行，行业估值中枢抬升，给予公司2021年PE估值45~50倍，对应股价66.2~73.5元。

This year, the photovoltaic industry will definitely be differentiated, inverter, module, silicon segment industry in the end who can continue the boom cycle, decided who can go higher this year.After the differentiation, the boom of the sub-industry is easy to continue to fall back trend, the difficulty of stock selection will be increased. Today, the old section of the silicon material industry under the overall opportunity this year. Because I personally think that the sustainable boom should be the upstream silicon industry, photovoltaic midstream module industry profit is likely to be under pressure this year. Today I'm going to talk about the silicon leader - Tongwei Stock.

Silicon industry prosperity

1. In 21 years, the silicon material industry added limited capacity, the downstream capacity expanded rapidly, the supply and demand were tight, the silicon material added limited capacity, and the overall supply was tight. It is estimated that the global demand for new PV installed capacity in 2021 is 160~170GW, which corresponds to the demand for silicon wafers of 192~204GW according to the capacity ratio of 1:1.2. Corresponding to the demand for polysilicon material to reach 557,000 ~ 592,000 tons.Global polysilicon production capacity reached 609,000 tons by the end of 2020, according to the Silicon Industry Association. In 2021, the new production capacity is mainly concentrated in the top enterprises, which will be released in the fourth quarter. Considering the long production expansion cycle of silicon material, the actual new production capacity of silicon material in 2021 is limited, and the effective production capacity is expected to be 649,000 tons, and the supply and demand of silicon material is tight.Downstream silicon wafer expansion speed up the pace, driving the overall silicon demand. According to SolarZoom, by the end of 2020, wafer companies had a production capacity of 189GW and are expected to expand to 283.5GW in 2021, a 50 percent year-on-year increase. If calculated according to the silicon consumption of 2.9g per watt in 2021, the corresponding silicon material required is 822,000 tons, far exceeding the effective silicon material capacity of 649,000 tons in 21 years. With the rapid expansion of wafer enterprises, the difference between the supply and demand of silicon materials and wafers is expected to increase gradually in 2021.

Tongwei 21 years of silicon material capacity has been locked in advance.Longi, TRW, Meke Silicon Energy and Jinko signed long-term silicon material purchase agreements with the company respectively in September and November 2020, with a total purchase quantity of about 335,600 tons, and an average annual purchase quantity of about 179,700 tons, accounting for about 105.7% of Tongwei's nominal capacity of 170,000 tons in 2021. Tighter supply and demand of silicon materials in 2021 will support the silicon material average price to maintain high. Assuming that the silicon material average price in 2021 is 90 yuan /kg, a conservative estimate is that the total amount of the above long single agreement is 30.2 billion yuan.

2, the silicon material cost advantage is outstanding, the volume and price rise will increase the company's profit

Silicon material business outstanding cost advantage, profitability industry leader.The electricity price of polycrystalline silicon accounts for nearly 30% of the total production cost of silicon material. In the low electricity price area of the company, the average production cost of silicon material is 39.5 yuan /kg, among which the average production cost of new capacity is 36.5 yuan /kg, which belongs to the first echelon of the industry. In 2020H1, the sales volume of high-purity silicon reached 45,000 tons, an increase of 97.04% year on year. Under the condition that the average price of single crystal and polycrystal decreased by 14.4% and 41.2% year on year respectively, the average gross profit rate of high-purity silicon products of the company reached 27.70%, maintaining a good competitiveness.

Volume price rise, profit is expected to be substantially thickened.Tongwei's nominal capacity of silicon material in 21 years has been locked in advance by downstream customers. Since the new capacity of 70,000 tons will be put into production in 21Q4, considering the progress of capacity climbing, it is estimated that the shipment will be about 115,000 tons in 21 years. According to the company's current operating cost calculation, every 5 yuan /kg increase in the price of silicon material will increase the company's corresponding silicon material profit by 438 million yuan. The performance forecast based on the silicon material price center in 21 years: the tight supply and demand of silicon material in 21 years will support the silicon material average price to maintain a high level of 90~95 yuan /kg. It is estimated that the silicon material sales amount of the company in 21 years is about 10.93 billion yuan, accounting for 29.1% of the company's revenue in 2019. It is expected to achieve net profit of about 3.76 billion yuan, 1.4 times the total net profit of the company in 2019, and profit is expected to be significantly thicker.

3. The cost of new silicon production capacity has been optimized successively, and the competitiveness of the industry has been further enhanced

New production capacity has been put into operation to enhance the company's competitive advantage in high-purity silicon.At present, the company has formed a high purity silicon production capacity of 90,000 tons, 80,000 tons under construction capacity, according to the company's February 2020 announcement planning in 2021/2020/2023 annual capacity of 115,000-150,000 tons, 15,000-220,000 tons and 220-290,000 tons respectively. High-purity crystal silicon continues to produce at full load, capacity utilization rate reaches 116%, single crystal material accounts for 90.86%, and various consumption indexes and costs continue to decrease. The monthly output of high-purity crystal silicon of 2020H1 company has exceeded 8000 tons, the production capacity continues to increase, the consumption index continues to decline, the single crystal material in the product has reached more than 95%, and can realize the batch supply of N-type material. In addition to the 20,000 tons of old production capacity in Leshan, the production cost of Baotou Phase I and Leshan Phase I (60,000 tons in total) in production, 35,000 tons of Leshan Phase II and 40,000 tons of Baoshan Phase I projects under construction are all lower than 40,000 yuan/ton.With the continuous improvement of technology and production capacity, the cost level will be further optimized.

Battery condition

1. Battery production capacity continues to expand and technical routes are abundant

In 2021, Tongwei battery production capacity will reach 40GW, and mainly large-size production capacity.By the end of 2019, Tongwei's cell production capacity has reached 20GW. 2020H1 Meishan Phase I 7.5GW high-efficiency solar cell project has been put into production, which is compatible with the production of all cell products of 210 and below sizes. Currently, Tongwei's production capacity is climbing. At the same time, it has launched the Meishan Phase II 7.5GW and Jintang Phase I 7.5GW high-efficiency solar cell projects (compatible with 210 and below sizes). By 2021, the production capacity of ZTW cells will exceed 40GW.

Abundant reserves of technical routes.In mainstream focus the PERC technology in products of the company to further improve the conversion efficiency and reliability and optimization, on the basis of actively include HJT, TOPCON, PERC + could become a mainstream of the next generation of production technical route of the pilot and the transformation work, at the same time keep the including perovskite, laminated battery tracking and forward-looking technology research and development.

2. Strong non-silicon cost control ability, the first echelon in the industry

Battery cost reduction space mainly comes from the non-silicon cost, the company's non-silicon cost control ability is excellent.According to the industry average battery cost breakdown provided by SolarZoom, silicon wafers account for 66% of the cost of the battery, while the remaining 34% is non-silicon cost. The reduction space of the cost of the battery wafers mainly comes from non-silicon cost. The non-silicon cost of the battery wafers of the tunway mainly includes sizing, auxiliary materials, labor costs and manufacturing costs. According to CPIA data, the average non-silicon cost of the solar cell industry in 2019 is about 0.31 yuan /W, and the non-silicon cost of Tongwei is 0.2-0.25 yuan /W, which is only 60%-80% of the average level of the industry, showing a significant cost advantage.In the future, with technological progress and capacity expansion, the cost of non-silicon will further decrease.

3. The proportion of large-size shipments gradually increased, and the profitability increased steadily

Large-scale profitability exceeded market expectations.The larger size of the cell can increase the total power output per unit of time, spreading out the cost of equipment depreciation, labor, power and so on. The popularization of 182 and 210 sizes is accelerated. Large size can be diluted equipment depreciation and other costs, non-silicon costs of 166 and above cells are lower than 158.The silicon wafer has an advantage over the 166 size, which costs 4 cents less per watt than the 158. Gross profit margin 210>166 BBB>8, with the company's large size battery shipments continue to increase, the level of profitability will continue to rise.

Investment advice

The high growth of new PV installed capacity in 2021 is highly certain, and silicon material, as the most tense link of supply and demand situation (the supply is tight due to the gradual withdrawal of old production capacity and the limited increase of new production capacity), is expected to guarantee its price and profitability of related enterprises. As the absolute leader in the silicon material expansion pace, Tongwei shares will further increase its market share in the future, and the layout in the large-size battery/module segment will also provide strong support for the profitability of the company.

It is estimated that the net profit of the parent in 21~22 years is 6.1/7.04 billion yuan respectively, and the corresponding EPS is 1.47/1.56 yuan respectively. Considering the uptrend of the photovoltaic industry and the rise of the industry valuation center, the company is given a PE valuation of 45~50 times in 2021, corresponding to the share price of 66.2~73.5 yuan.