Zhonghuan (002129) Annual Report Comments: Performance in line with expectations Silicon wafer leader position continues to consolidate

Zhonghuan (002129) Annual Report Comments: Performance in line with expectations Silicon wafer leader position continues to consolidate

Zhonghuan (002129) Annual Report Comments: Performance in line with expectations Silicon wafer leader position continues to consolidate

The company’s performance in 2018 was in line with expectations and net profit attributable to mothers was achieved6.

3.2 billion companies released 2018 annual report: operating income of 137 in 2018.

5.6 billion (+ 42% YoY).

63%), net profit attributable to mother 6.

320,000 yuan (+8 compared with the same period last year).

16%), after deducting non-returning net profit3.

1.3 billion (YOY-38.

69%); of which, the fourth quarter achieved revenue of 45.

One million yuan (+61 compared to the same period last year).

21%), net profit attributable to mother 2.
.

0.6 million yuan (+57 compared with the same period last year).

06%).

By continuously optimizing the product structure, concentrating advantageous customer resources, and effectively implementing lean management through strict cost control, the company effectively reduced operating costs.

The company expects to realize net profit attributable to mothers in the first quarter of 20191.

8-2.

2 ‰, an increase of 44 in ten years.

03% -76.

04%.

We are optimistic that the company’s photovoltaic wafer leader is stable, the semiconductor business has begun to increase volume, and the performance is flexible.

The company’s silicon wafer prices have risen and production capacity has continued to expand. We expect net profit for 2019-2021 to be 12 respectively.

51 (+1.

43), 18.

09 (+1.

79) and 23.

700,000 yuan, the corresponding EPS is 0.

45, 0.

65 and 0.

85 yuan, maintain the “strongly recommended” level.

Improved supply and demand led to increased profitability. Monocrystalline silicon production continued to expand. PV monocrystalline silicon wafers have high parallel barriers and a good competition pattern.

In 2019, the total demand for photovoltaics returned to the growth channel, and the increase in monocrystalline penetration and expansion of production 都市夜网 capacity led to three factors driving the profitability of photovoltaic monocrystalline wafers to gradually return to normal levels.

The overall expansion seen in 2019 is only the capacity transformation of Longji and Zhonghuan. In the case of overseas installations exceeding expectations, the supply and demand relationship of photovoltaic wafers will be greatly improved.

In March 2019, the company and the People’s Government of Hohhot reached a cooperation goal on the joint investment and construction of the “Phase 5 25GW single-crystal silicon project in Central,” with a total investment of about US $ 9 billion. After the completion of production, the annual production capacity will reach 25GW.”The annual production capacity of monocrystalline silicon will exceed 50GW.

Semiconductor wafer production capacity was released as scheduled and began to enter a high-speed development stage. The company is the leader in domestic semiconductor wafers. In 2018, Tianjin Zhonghuan has formed a 300,000 wafer / month 8-inch polished wafer production capacity.

In 2017, the company cooperated with Jingsheng Mechanical and Electrical, and the Wuxi Municipal Government invested 20 billion US dollars to build 8-inch and 12-inch polished wafers. It is estimated that by 2022, 8-inch production capacity will be 750,000 wafers and 12-inch 600,000 wafers / month.

At present, global chip production is expanding faster than the wafer side, and the gap between supply and demand of silicon wafers will continue to exist. At the time of expansion of wafer fabs, there is huge room for the replacement of imported silicon wafers.

Therefore, the company’s semiconductor wafer business will enter a high-speed development stage.

Risk warning: PV demand is less than expected; semiconductor production expansion progress is less than expected.