Photovoltaic Industry Chain Advancing Rapidly: Longji Shares Closed Loop Battle

How much more can the market value of Longji shares rise?

When the total market value of the world's largest single crystal silicon product manufacturer exceeded 200 billion yuan, people seem to have higher expectations for Longji.

On August 7, the stock price of Longji rose sharply against the trend, with a total market value of more than 210 billion yuan.

This is the last achievement of Hanneng. After the withdrawal of the former photovoltaic film giant from the Hong Kong stock market, people did not wait for Li Hejun to reappear the glory of hanergy in the past. However, some negative rumors such as wage arrears and bankruptcy review were heard from the companies under the "hanergy system".

The dilemma of hanergy can not represent the failure of thin film technology, and the success of Longji can only show that crystalline silicon technology is more suitable for the current market. In the photovoltaic industry with rapidly changing technology routes, it is not known whether the future technology scene will be blooming or a unique one.

However, it is certain that, regardless of market value performance or market share, Longji shares are now playing an important role in the photovoltaic industry.

"Since its listing in 2012, Longji has created a miracle in the PV industry in terms of market value." A reporter is not willing to give a high-level stock price analysis in the stock market of Longji, which is not willing to give a high-level stock price analysis in the stock market.

"But whether the future valuation can continue to rise depends on whether the photovoltaic industry and the company itself can have new" bright spots. " According to the analyst's observation, after mastering the key production link of monocrystalline silicon wafers in the photovoltaic industry, promoting "vertical integration" and forming the layout of the whole industrial chain has become the only way for Longji to open up a long-term growth space.

The turning point has come

In the photovoltaic industry chain, in addition to silicon materials, silicon chip is one of the core links in the upstream of the industry chain.

In 2006, Longji Co., Ltd. established the strategic positioning of the monocrystalline silicon chip manufacturer, bet on the single crystal technology route in the silicon chip link, and became the first "crab eating" photovoltaic manufacturing company in the industry.

At that time, the prospect of single crystal technology in the industry was in a wait-and-see state: on the one hand, the maturity of polycrystalline technology makes the product cost-effective, and polycrystalline firmly controls the world of photovoltaic silicon technology; on the other hand, the price difference caused by the cost of single polycrystalline products determines that the demand for a large number of polycrystals in a short time is difficult to be replaced. The 21st century economic reporter inquired the data and found that even ten years after Longji company determined the single crystal technology route, the proportion of polycrystalline products in the whole photovoltaic market is still several times that of single crystal products.

In short, the difference between single crystal and multi chip is quite obvious. The photoelectric conversion efficiency of monocrystalline silicon solar cells is about 15%, the highest is 24%, which is the highest among all kinds of solar cells. However, due to the high production cost, it is not widely used. The photoelectric conversion efficiency of polycrystalline silicon solar cells is about 12%, and the service life is shorter than that of monocrystalline silicon solar cells. However, the energy consumed in the manufacturing process of polycrystalline silicon solar cells is about 30% less than that of monocrystalline silicon solar cells, because the advantages of cheap manufacturing have been greatly developed.

The turning point is in 2019. According to the statistics of China Photovoltaic Industry Association, the proportion of single crystal products increased rapidly last year, and exceeded polycrystalline products for the first time, accounting for 65%.

However, the competition with polycrystalline products makes Longji share fully enjoy the Profit Dividend brought by different technology generation difference.

As one of the "two giants" of single crystal, Longji holding the two sharp swords of "reducing cost" and "expanding production", has rapidly established the leading position of global single crystal product manufacturer in the past ten years.

The rapid decrease of cost is an important reason that single crystal can successfully extrude polycrystalline market share.

R & D expenses show that since its listing in 2012, Longji's R & D expenditure has grown rapidly - from 84 million yuan at the initial stage of listing to 1.677 billion yuan in 2019, an increase of nearly 19 times. Correspondingly, the cost of silicon wafers of Longji has also decreased significantly.

According to the prediction and analysis of Kaiyuan securities, the non silicon cost of monocrystalline silicon chip of Longji Co., Ltd. in 2012 was about 5.12 yuan / piece, while in 2019, this data decreased to 0.74 yuan / piece, with a decrease rate of 85.6%. According to Kaiyuan securities, the company's main ways to achieve cost reduction include: promoting advanced technologies such as thin wire application and sheet cutting; improving the yield and yield of finished products; integrating the production supply chain to improve the planning and material control ability; and improving the substitution rate of auxiliary materials localization.

Thin wire and wafer cutting of photovoltaic silicon wafer refers to the introduction of diamond wire cutting technology. This technology left a heavy mark in the promotion of inkjet.

Diamond wire cutting can reduce the demand for silicon material per unit silicon wafer, making the silicon wafer thinner and faster, thus reducing the unit investment cost of silicon wafer. More importantly, the application of this technology is also an important driving force for the promotion of the gross profit margin of Longji's silicon wafer business.

The reason is that the cost of silicon wafer can be reduced greatly due to the introduction of silicon wafer Wang Yingge, general manager of Longji brand, told the reporter of the 21st century economic report.

The 21st century economic reporter found that when Longji first introduced the technology of diamond wire cutting in 2013, due to the high cost of imported diamond wire, the company was in a deficit state at the initial stage. In an interview with the media, Zhong Baoshen, chairman of Longji Co., recalled that in order to deal with the technological monopoly of foreign enterprises, Longji intends to support domestic diamond wire enterprises by itself, and make the plan that "it is acceptable to lose less than 40 million yuan a year".

In the first quarter of 2014, Longji silicon wafer line cutting project began to break even. With the large-scale replacement of slicers, the non silicon cost of Longji's slicing link has decreased rapidly, and the overall gross profit margin of silicon chip business has increased rapidly.

In 2013, the gross profit margin of Longji's monocrystalline silicon chip business was 11.97%, and in 2019, this figure rose to 32.18%.

The production capacity also needs to be followed up.

In recent years, the pace of Longji's capacity expansion has even made its peers "look sideways" and "radical" questions come and go.

By the end of 2019, the production capacity of lonson silicon components reached 42GW and 14gw respectively. According to the production expansion plan, by the end of 2020, the company's single crystal silicon chip and module capacity will exceed 75gw and 30GW respectively.

As a result, the "radical" expansion of production allowed Longji to gain a huge market share in a short period of time, and the company's monocrystalline silicon chip and component business has become a "cash cow". In 2019, Longji's single crystal module and silicon chip business will achieve an operating revenue of 14.570 billion yuan and 12.913 billion yuan respectively, accounting for 44.29% and 39.25% of the total revenue of the company.

However, with the shrinkage of polycrystalline market share and the expansion of single crystal production capacity, when the market evolves into full competition of single crystal products, can Longji share's past dividend continue?

The aforementioned analysts told the 21st century economic reporter that the era of high profits of single crystal products in the past is bound to become the past. The price game caused by full competition of products and the decline of overall gross profit rate after the industry matures are inevitable.

Wang Yingge also said in an interview with 21st century economic reporter that Longji shares are facing a different pattern of competition than in the past.

"In the past, Longji made money from" leading industries ". Whether it is the application of perc technology or the introduction of double-sided technology, Longji hopes to be one step ahead of the industry, so as to maintain a certain bargaining power." Wang Yingge believes that with the narrowing gap of single crystal products and full sharing of industry information, the whole industry will eventually return to the mature profit level.

in the teeth of the storm?

On August 7, Longji Co., Ltd. released the first building photovoltaic integration (BIPV) product "Rongding", which officially entered the building photovoltaic integration market and opened a new product line.

At present, Longji shares are constantly fading the label of "monocrystalline silicon chip manufacturer" and transforming into a more comprehensive positioning "solar technology company". Behind this, the company is experiencing "vertical integration" in its business.

In 2014, the reporter reported that Longji, a photovoltaic power plant company limited, started to acquire the shares of Xi'an Longji photovoltaic power plant Co., Ltd., which was founded in 2014. In the same year, the reporter found that Longji Electric Power Co., Ltd. started to acquire the equity of Xi'an Longji photovoltaic power plant Co., Ltd., which started in 2014.

Different from the profit seeking "vertical integration" of photovoltaic giant enterprises in the past, Longji shares' pace of extending downstream is closely related to its own technical advantages.

Li Zhenguo, President of photovoltaic power station, will not emphasize that large-scale shares will be held in the future.

Wang Yingge also told 21st century economic reporter that Longji's "vertical integration" is based on the expansion of product application range.

"At present, the manufacturing business of silicon wafers and components is still the core business of Longji, and new energy products such as power station solutions and BIPV are still complementary businesses." Wang Longding will represent the company's share of PV in the future, even though it will be in the initial stage of its PV business.

"The past historical experience and the current financial strength make Longji not embark on the road of heavy investment in every link of the whole industry chain." The aforementioned securities analysts told the 21st century economic reporter that this is both "money consuming" and "time consuming".

The 21st century economic reporter noted that since its listing, most of the capital investment of Longji shares still revolves around the middle and upper reaches of monocrystalline silicon rods, wafers and components, which has consolidated and enhanced the company's bargaining power in silicon wafers, components and other links.

Since July this year, the price of photovoltaic industry chain has jumped due to the change of supply-demand relationship of silicon materials in upstream. Longji shares have also been pushed to the "crest of the storm" due to the two price adjustments in late July.

Silicon chip is the most valuable business link of Longji. Because of the improvement of market concentration, the company enjoys certain pricing power in this link.

As one of the leading enterprises in the stock market, the share ratio of the two leading enterprises in Longdu is more than 80%. However, the pattern differentiation between silicon wafer and battery leads to the stronger bargaining power of silicon wafer. This round continues to transmit the pressure of rising price of raw material silicon material to downstream.

However, Wang Yingge stressed that the price fluctuation of photovoltaic industry chain is the final result of the game between supply and demand in the market. Under the "vertical integration" mode of Longji shares, the bargaining power can not be formed for every link.

In fact, when encountering the price fluctuation of photovoltaic industry chain, the advantage of "vertical integration" is highlighted. With the price rising pressure of silicon materials and silicon wafers transmitted to the downstream, vertical integration enterprises have stronger cost control ability in the component link. According to the research and analysis, compared with the module factory of outsourcing battery chip, the component cost of vertical integration enterprise is reduced by about 10%.

The advantage of "vertical integration" lies in the integration of industrial chain. Huatai Securities believes that, first of all, in terms of industry standards, the advantages of vertical integration enterprises are more obvious; secondly, the upstream and downstream synergy brought by the advantages of vertical integration is expected to make Longji's business at the component end bigger and stronger and enhance the concentration.

Wang Yingge said that the development speed of Longji component business is unexpected, and 2020 will be an important milestone year for the company to realize "vertical integration".

According to the data, in 2019, Longji's component shipment volume reached 8.4GW, ranking the fourth in the world. According to the industry forecast, the company's component shipment is expected to rank first in the world in 2020.

However, the road of "vertical integration" is not a smooth road. On the one hand, financing capacity is an inevitable problem Longji will face in the future; on the other hand, whether the expanded capacity of silicon chips, components and other links can be absorbed smoothly will also affect the healthy development of the company and the industry.

At present, Longji shares is not short of money: as of the end of the first quarter of this year, the company's monetary capital was 18.122 billion yuan, and the asset liability ratio was 52.05%, which was 0.24 percentage points lower than that at the end of 2019.

?