Photovoltaic industry chain performance scanning: upstream spring brilliant middle and lower reaches "belt tightening" 2022 who can counterattack?

2021 is regarded as a carbon-neutral year, and driven by the dual-carbon goal and "county-wide promotion", the achievements of the photovoltaic industry are particularly dazzling. The new grid-connected installed capacity of photovoltaic power generation in China is about 53GW, ranking first in the world for nine consecutive years.

However, in the high prosperity of the industry, the differentiation of upstream and downstream profits is also a remarkable feature: among the photovoltaic industry chain companies that have disclosed their performance forecasts, the upstream and equipment companies have achieved satisfactory results, the profit of Daquan Energy (688303.SH) has increased by more than four times, and the upper limits of forecast net profit growth of High Test shares (688556.SH), Machine numerical Control (603185.SH) and Jinbo shares (688598.SH) are all above 200%. Beijing Express (601908.SH), Jingsheng Mechatronics (300316.SZ), Aotewei (688516.SH), etc., also increased by more than 100%. On the other hand, the battery chips and components in the middle and lower reaches show pre-deductions and losses, and the performance of the industry is significantly differentiated.

"whether the price goes up or down, the price of the battery will certainly converge with the upstream." A person from the battery chip manufacturer told the Financial Associated Press. However, industry analysts believe that the closer to the consumer terminal, the greater the pressure to increase prices, which is the general status quo of the industry. Under the pressure of the supply chain at the beginning of the silicon link, integrated manufacturers are expected to usher in faster profit repair.

The upstream profit thickens to continue the high boom.

The silicon material continues to be in tight balance in 2021, which gives prominence to the advantage of upstream bargaining power. "holding silicon is the king" has become the key word of the industry chain, which has been constantly verified in the recent performance disclosure. On February 13, 600438.SH shares (Townway) disclosed its performance in 2021, KuaiBao. The company achieved a total operating income of 66.602 billion yuan, an increase of 50.68% over the same period last year, and a net profit of 8.203 billion yuan belonging to shareholders of listed companies, an increase of 127.35% over the same period last year.

As for the reasons for the change in performance, Tongwei shares said that in 2021, the company's high-purity silicon products were in short supply, the market price increased significantly compared with the same period last year, and the company's high-purity silicon production continued to operate at full capacity, with annual sales of 107700 tons, an increase of 24% over the same period last year, and a substantial increase in profitability.

Benefiting from the increase in polysilicon sales and prices, Daquan Energy is expected to make a profit of 5.6 billion to 5.8 billion yuan in 2021, an increase of more than four times over the same period last year. 600089.SH expects to achieve a net profit of 6.8 billion yuan to 7.3 billion yuan belonging to shareholders of listed companies in 2021, an increase of 173.44% 193.54% over the same period last year.

It is worth noting that under the guidance of excess profits, Daquan Energy, Tongwei shares and other traditional silicon companies continue to expand production, Xinyi Solar Energy (00968.HK), Hesheng Silicon Industry (603260.SH) are also planning to enter the bureau, and spend a lot of money: Xinyi Solar Energy announced the establishment of Xinyi Crystal Silicon, with an initial production capacity of 60, 000 tons, which is expected to be put into production in 2024, and will expand production to 200000 tons in batches in the future. Hesheng Silicon Industry announced that it will invest 17.5 billion yuan to build an annual high-purity polysilicon project with an annual production capacity of 200000 tons, with a construction period from May 2022 to May 2025.

Under the expansion of production in turn, it is a hidden worry about whether the silicon enterprises can continue to make high profits. In fact, from the end demand expectations, polysilicon surplus expectations have emerged. According to the statistics of the Silicon Industry Branch, it is estimated that the domestic polysilicon production capacity will reach more than 860000 tons / year in 2022, an increase of 340000 tons / year compared with the previous year. According to the output of 3.5GW-4GW components per 10,000 tons of silicon, the installed capacity of the actual supply of more than 300GW significantly exceeds the terminal demand.

At the same time, the substantial expansion of production further aggravates the expectation that the silicon material will fall back at a high level. According to the forecast of brokerage institutions, the annual price center of silicon material in 2022 is 18-200000 yuan / ton, and the average tax price of silicon material will fall to about 170000 yuan / ton in the fourth quarter.

However, some analysts in the industry believe that the high profits of polysilicon will not end easily. Some industry observers told the Financial Associated Press that the cost of polysilicon is between 50 yuan / kg and 80 yuan / kg. If the cost of the head manufacturer is better controlled, it may be lower. Therefore, even if the price of silicon material is reduced to 170yuan / kg, it can still maintain a good profit level.

In addition, the full bargaining power is also the strength of expansion. The silicon market is highly concentrated, with the top five markets accounting for more than 80% of the market, and the possibility of a price war is relatively low. in the future, leading manufacturers will not rule out reducing production by reducing the operating rate to ensure profits. Therefore, there are many variables in the future due to factors such as slow release of silicon production capacity.

The integration of middle and lower reaches is expected to break through the predicament.

From the perspective of performance, the profits of the manufacturers with a single business in the middle and lower reaches are more obvious because of their weak anti-risk ability. In the component sector, Oriental Sunrise (300118.SZ) predicted a net profit of-52.5 million to-35 million yuan, a year-on-year decrease of 121.17% to 131.75%, from profit to loss.

A photovoltaic industry observer told the Financial Associated Press that the profit level of the photovoltaic industry chain is basically decreasing from upstream to downstream. Oriental daily production configuration is focused on battery chips to components, while last year's increase was mainly concentrated in silicon and silicon wafers, which will erode the profits of the downstream link more seriously. In terms of auxiliary materials, in addition to glass, aluminum frame, backplane, plastic film and so on are affected by commodity fluctuations, the increase is also obvious, aggravating the downstream cost pressure.

The same is true of 600732.SH, which specializes in a single battery business. The performance forecast shows that the company's net profit attributed to the shareholders of the listed company in 2021 suffered a loss, ranging from-10 million yuan to-70 million yuan, from profit to loss compared with the same period last year. The company mentioned that the price increase of battery chips is less than that of upstream, downstream demand is lower than expected, and reduced production capacity is the main reason for the pre-loss.

Therefore, betting on photovoltaic integration is still an important strategy for component companies to cope with this round of supply chain pressure, as well as from the recent actions of head manufacturers. On February 11th, Jingao Technology (002459.SZ) announced plans to expand the company's integrated production capacity, including silicon wafers, batteries, auxiliary materials and photovoltaic power stations, with an estimated total investment of 3.455 billion yuan.

According to brokerage structure statistics, in 2022, Jingke Energy (688223.SH) is expected to form silicon wafers, battery chips and components with an integrated production capacity of 40GW, 40GW and 50GW, with a self-financing rate of 80 per cent.

Hu Bing, an expert in the photovoltaic industry, believes that in the face of the imbalance between supply and demand in the industrial chain, the advantage of vertically integrated component enterprises is more obvious, which can not only slow down the cost rise caused by price fluctuations in the upstream, but also better optimize the packaging process to improve the efficiency of components.

Installed demand rebounds to improve downstream profits

For the middle and lower reaches of the "bitter upstream for a long time", it is expected to ease the cost pressure after the price of silicon is loosened. A person from the battery chip manufacturer told the Financial Associated Press that in the long run, no matter whether the price goes up or down, the price of the battery sheet will certainly be the same as that of the upstream. However, taking into account the downstream acceptance, the price increase will be more cautious. However, according to the market disclosure, silicon prices will fall sharply this year, companies with lower costs will have higher bargaining power, and profits will improve.

In addition, the rebound in installed demand will also improve downstream profits. The industry forecasts that China's photovoltaic installed capacity may exceed 75GW in 2022, and since the beginning of this year, terminal demand has obviously bottomed out and rebounded. According to industry media statistics, more than one month, the major groups have a total of super-39GW photovoltaic modules bidding. Among them, the collection scale of photovoltaic modules of Huadian Group in 2022 is as high as 15GW, double that of 2021. Since January, the 7.5GW components of four central enterprises, PetroChina, three Gorges Electric Power (Anhui), Jiangsu Southern Power Grid and China Nuclear Power Corporation (Nanjing), have been collected and calibrated. China Electric Power Construction and the National Electric Power Investment Co., Ltd. have sung the standard for the collection of components up to 12GW.

Longzhong Information analyst Yu duo told the Financial Associated Press that the yield of the power plant needs to be calculated according to the local environment. According to the current price of 1.85 to 1.88 yuan per watt, the IRR of the power plant is about 5 to 6 percent, which is at a relatively low level. According to reports, household price acceptance of components is relatively high, in the case of relatively low IRR, can only meet household photovoltaic investment needs, industrial and commercial and centralized inhibition is more obvious. When the price of silicon material goes down in the future, if the price of components is reduced to 1.7 yuan per watt, the demand for centralized and large-scale industrial and commercial installation will be more obvious.

Therefore, after the recovery of terminal installation demand, the volume and price of battery chips and components will increase together, and the profit is expected to gradually come out of the bottom. According to the Great Wall Securities Research report, with the decline in the price of main and auxiliary materials and the increase in the acceptance of the rate of return by investors in terminal power stations, and the optimization of the competition pattern in the superimposed industry, integrated component manufacturers are expected to be the first to benefit, profit is the first to repair, and the expected volume of components is expected to increase.

It is worth noting that from the point of view of the matching of supply and demand, the middle and lower reaches are expected to usher in profit repair in 2022, but the actual degree may also be limited. In fact, the upstream silicon price goes down and the component cost is reduced, but the terminal power station is also very sensitive to the component price and will set the component purchase price according to the upstream price change.

According to Yu, the profits of component enterprises are generally between 10% and 30%. If the gross profit is less than 10%, the component enterprises will reduce their start-up and cope with the profit loss caused by the rise in the price of raw materials; on the contrary, if the upstream costs fall relatively quickly and the component profits increase significantly, the downstream power stations will also lower the prices, and the component enterprises will not make higher profits.