Longji has a revenue of 54.58 billion yuan in 2020. Silicon wafers continue to reduce costs and increase efficiency.

Recently, Longji shares issued a performance report. The performance in 2020 increased by 62%. In the first quarter of 2021, the performance increased by 34%. In 2020, the revenue was 54.58 billion yuan (+ 66%), the attributable net profit was 8.55 billion (+ 62%), the cash flow of business activities was 11.01 billion yuan (+ 35%), and the weighted ROE reached 27.23% (+ 3.30pcts). In the first quarter of 2021, the company realized revenue of 15.85 billion yuan (+ 84.3%), net profit of 2.5 billion yuan (+ 34.2%) and cash flow of operating activities of-1.61 billion yuan (previous value-540 million yuan). The company's revenue, shipments and capacity targets all exceeded the planned targets announced at the beginning of 2020.

Component shipments rank first in the industry, and silicon wafers continue to reduce costs and increase efficiency. In 2020, the export volume of the company's components reached 23.96GW (+ 223.98%), with a global market share of 19% (+ 11pcts), jumping from the previous fourth in the industry to the first in the industry, mainly driven by the strengthening of overseas sales channels and the expansion of overseas production capacity. In 2020, the off-wafer sales reached 31.84GW (+ 25.65%), the non-silicon cost of pulling crystal decreased by 9.98%, and the non-silicon cost of slicing decreased by 10.82%. It is estimated that the non-silicon cost of silicon wafer has decreased by more than 35% in the past two years, leading the industry in cost control. Benefiting from the increase in shipments, the company's revenue from photovoltaic modules and battery plates increased by 140%, and revenue from silicon wafers and silicon bar plates increased by 12.6%, accounting for more than 94% of the company's revenue, boosting performance growth. 2021Q1 expects off-wafer sales to reach 18.4GW (yoy+26%) and components to reach 6.33GW (+ 238%).

The net interest rate is resilient and the supply is guaranteed by long-term agreement orders. Since 2020, the price of raw materials in the photovoltaic industry chain has risen sharply, the price of silicon has increased by 59%, and the price of photovoltaic glass has increased by 75%. Under the fluctuation of industry prices, the company's net interest rate in 2020 has been stable at 15.94% (yoy-95pcts). The stable profit margin level comes from product price transmission, process technology improvement, high profit margin market revenue growth and raw material guarantee ability. In the past two years, the company has signed orders with major photovoltaic glass suppliers such as Deli, Follett, Southern Glass and Rainbow New Energy, estimated that the annual supply of photovoltaic glass is more than 34GW, and signed orders with major silicon suppliers such as Tongwei, Daquan, Xinte Energy, Poly Xiexin, Silicon and OCI, estimated annualized / this year silicon supply is about 80GW/64GW. At a time when the price of the industrial chain fluctuates and some materials are in short supply, the above long Association orders ensure the raw material supply of the company's output growth.

Production capacity continues to expand and new technology routes are put into production. According to the company's business plan, in 2021, the wafer production capacity is expected to reach 105GW (+ 23.5%), the single crystal battery capacity 38GW (+ 26.6%), the single crystal module capacity to reach 65GW (+ 30%), the supporting wafer shipment to reach 80GW (+ 37.6%), and the component shipment to reach 40GW (+ 63%). Another Yinchuan 5GW single crystal-2% 47% 96% 145% 194% 243% 292% 2020-04 2020-08 2020-12 2021-04 Longji shares (601012) this report is for internal customers' reference only-2-be sure to read the disclaimer after the text part of the company's research report battery and Xixian 15GW single crystal battery project is expected to be put into production in 2022. In 2020, the company's R & D investment reached 2.592 billion (+ 54.5%), promoting the quality control level of N-type silicon wafer products, and exploring the improvement of battery chip product conversion efficiency, in which phased technology iterative products have reached the trial stage. It is expected that there are two kinds of technology route products to be promoted to both distributed and centralized power plant markets.

Layout of new space in the field of carbon neutralization, hydrogen energy and BIPV. In March 2021, the company invested 1.635 billion yuan to acquire a 27.25% stake in Saint, a building roof manufacturer, making it the second largest shareholder. Combined with the company's first BIPV products launched last year, plus building photovoltaic market layout, shipments are expected to reach 400MW this year. In April 2021, the company reached a strategic cooperation with Sinopec to explore the application scenarios in the direction of photovoltaic + green hydrogen.

Profit forecast. Taking into account the extent of the company's capacity expansion and the price fluctuation of the industrial chain, it is estimated that in 2021-2023, the company's revenue is 86 billion, 121.6 billion, 151.1 billion, net profit 11.1 billion, 15.1 billion, 20.3 billion, profit growth of 30%, 36%, 34% per share EPS is 2.87,3.92 yuan per share, 5.26 yuan per share respectively. The company is a leading photovoltaic enterprise with forward-looking business layout and strong certainty of growth. the reasonable price-to-earnings ratio for 2021 is 34-36 times, and the reasonable range is 97.6-103.3 yuan, maintaining the "recommended" rating.

Risk hint: photovoltaic demand is lower than expected, trade disputes between China and the United States have intensified, and silicon prices have fluctuated sharply.