Recommend to buy Hesheng Silicon Industry! High roe low-cost production capacity of metal silicon faucet, this year's PE15X times, next year's PE12X times, and the price of metal silicon, silicone products increased by 10%, the company's net profit increased by 1 billion, with a flexible valuation of the industry leader, it is recommended to buy Enter!


1. Cost advantage is obvious: electricity cost advantage + graphite electrode self-sufficiency advantage + scale advantage to ensure that the company's metal silicon single-ton cost is lower than the competitor's 2,000 yuan or more, that is, the gross profit margin is higher than the competitor by more than 15%; considering the payment of government funds and additional And the system filing fee, the cost of self-supplied electricity bills of Hesheng Silicon Industry is about 0.17 yuan / kWh, compared with 0.26-0.28 yuan / kWh of Yunnan Sichuan Fengshui period electricity price and 0.3 yuan / kWh of public network electricity price, there is a clear advantage, single The electricity consumption per ton of metal silicon is 12500-13000 degrees, and the cost advantage of single ton electricity cost is 1400 yuan. At the same time, considering the scale advantage and the cost per ton of graphite electrode self-produced company is at least 2,000 yuan lower than the competitor, the current metal silicon 441 tax price is 13,500 yuan. / ton, the company's metal silicon gross profit angle is higher than the peers more than 15%.


2. Rapid expansion of production capacity: High-roe low-cost production capacity has expanded rapidly. This year, the production capacity of metal silicon has doubled by 400,000 tons, and the total production capacity has reached 800,000 tons. It was put into operation in April. In the future, the company's domestic market share of metal silicon will increase from 18% in 2017 to 50%! The organic silicon has been expanded in an orderly manner. The 50,000-ton 110-gum technology upgrade project was put into operation at the end of 2017. The 100,000-ton ring siloxane project is expected to be put into production in 2019.


3. The industry has been improving for a long time: from the perspective of industry, new energy photovoltaics provide demand variables. Silicone new materials and silicon-aluminum alloys provide demand growth stability. The annual demand growth rate is over 10%, and the supply end is completely stopped due to China’s complete suspension of self-supplied power plants. And Xinjiang, Yunnan, strictly control the new capacity of metal silicon. In the future, the new supply of metal silicon is very limited. The price of metal silicon is expected to continue to maintain a good position. In 2018, the overall supply and demand of metal silicon is balanced, the price is expected to fluctuate, and the average price of metal silicon 441 is expected. At 13,200 yuan / ton, 2019, 2020, with tight supply and demand, the price is expected to rise steadily. The average price of metal silicon 441 from 2019 to 2020 is expected to be 13,700 yuan / ton, 14,000 yuan / ton. The world's leading leaps in organic silicon are slow to expand. The world's major new capacity is mainly concentrated in the second half of 2019. It is expected that the price of organic silicon will continue to be strong until the second half of 2019.


4. Valuation is cost-effective and flexible: the performance of the company's product volume and price rises in the whole year. The contribution from the volume is the most obvious. The net profit of 2018/2019 is 3.3 billion/4 billion net profit, PE15X/12X, based on the current price of metal silicon. For every 10% increase in price, the company's net profit increased by 600 million yuan. For every 10% increase in silicone price, the net profit increased by 400 million yuan. The industry leader with flexible valuation is recommended to buy!


In May and May, the company's rising catalyst is that the price of silicones is expected to continue to rise. The price of metal silicon will be slightly lower due to the supply peak season, and the overall price will fluctuate. Second, the company's quarterly profit will continue to grow, and the second quarter single-quarter performance guidance 6.7- 870 million, a significant increase from the first quarter of 6.3, the second quarter profit growth is mainly due to the official production of new metal silicon production capacity in April, the company's production and sales will increase by the same period, while the company's new capacity supporting self-sufficient power plant will also be put into production in the third quarter, metal silicon cost It will drop one step, and the profit in the third and fourth quarter will be better than the second quarter.


*Disclaimer: The content of the article is for reference only and does not constitute investment advice.