Longji shares (601012): Create the future with Tongwei
The incident describes a long-term strategic cooperation agreement between Longji and Tongwei Co., Ltd. Event commentary The leading players are strong and powerful, with complementary advantages and win-win cooperation.This cooperation is not the first in-depth cooperation between Longji and Tongwei. As early as January 2017, Tongwei took a 15% stake in Longji Yunnan’s Lijiang 5GW monocrystalline silicon rod project.15% equity in the tonnage project.The cooperation between the leading enterprises identified in this framework agreement is further deepened, which will help to ensure the sales of both products and the stable supply of raw materials, to achieve professional division of labor between the two sides, complementary advantages, and win-win cooperation.Under the trend of continuous improvement, the gap between leading enterprises and SMEs’ energy production has widened, and the transaction costs between leading enterprises and small enterprises have been relatively different. The cooperation between the two leading enterprises has effectively reduced transaction costs.In addition, for the industry, Longji Tongwei’s cooperation will drive and strengthen the resource sharing and integration of the photovoltaic industry chain, promote the improvement of industry concentration and further upgrade, and promote the healthy development of the industry. The profit cycle is upwards, and the monocrystalline wafer business is rising in volume and profit.We believe that under the background of the overall tight supply and demand in the industry, continuous scale expansion and cost reduction will drive the company’s monocrystalline silicon wafer business to continue to accelerate growth: 1) the company’s wafer capacity accelerated expansion, the leader gradually stabilized, the company’s monocrystalline siliconThe production capacity is 28GW, and the planned production capacity in 19-21 is 36, 50, and 65GW, respectively.It is expected that the company’s wafer output in 2019 and 2020 will reach 6 billion and 8 billion, respectively, an increase of 70% and 30% respectively; 2) In the context of the industry recovery, the relatively better market structure uses monocrystalline silicon wafers to improve gross 厦门夜网 margins firstThe company’s wafer gross profit margin continued to rise in 2018Q4, and it is expected that it will continue to rise steadily, driving the company’s wafer business profit to accelerate growth. The comprehensive competitiveness is excellent, and the component business will contribute important incremental profits.The company entered the field of components in 2014, and it took only three years to achieve the first breakdown of internal components, and made significant breakthroughs in overseas markets.With excellent comprehensive competitiveness, the company’s component business has continued to grow rapidly in the medium term. 1) The industrial chain is well-positioned and the cost advantage is obvious. 2) The use of technology and products to gradually establish an efficient brand advantage has been gradually 深圳桑拿网 established.Excellent, strong expansion ability.It is expected that the company’s components from 2019-2021 are expected to grow at an average annual rate of more than 50%, contributing to the increase in earnings. Maintain BUY rating.It is estimated that the EPS of Longji shares will be 1 in 2019-2020.19, 1.61 yuan, corresponding to 18, 14 times the PE. Risk Warning: 1. Industry installed capacity was lower than expected; 2. The capacity expansion rate of the industry exceeded expectations.