TZE(002129) 太平洋证券·2024-08-13 07:03Investment Rating - The report maintains a "Buy" rating for TCL Zhonghuan, citing its significant competitive advantages and potential for profit recovery as industry prices bottom out [3][41] Core Views - TCL Zhonghuan has a long history in silicon materials, with over 60 years of experience, and has developed a dual industrial chain focusing on both new energy and semiconductors [3][7] - The company's silicon wafer business holds a stable market share, with a leading gross margin in the industry, and its cost control and production efficiency are superior to second-tier competitors [3][24][30] - The report highlights that the company's profitability is closely tied to the fluctuations in silicon material prices, with a potential for recovery as prices stabilize in 2024 Q3 [3][21] - TCL Zhonghuan's financial health is strong, with a low debt-to-asset ratio, and its Middle East project is expected to enhance its global competitiveness [32][34] Business Model and History - TCL Zhonghuan, formerly known as Tianjin Semiconductor Material Factory, was established in 1958 and has been a pioneer in the photovoltaic industry since 1981 [7] - The company underwent a mixed-ownership reform in 2020, with TCL Technology becoming its controlling shareholder, and completed a significant capital raise in 2021 to fund its G12 high-efficiency battery project [7][10] Financial Performance - From 2019 to 2023, TCL Zhonghuan's revenue grew from 16.9 billion yuan to 59.1 billion yuan, with a compound annual growth rate (CAGR) of 37%, while net profit grew from 900 million yuan to 3.4 billion yuan, with a CAGR of 39% [14] - The company's silicon wafer shipments increased from 30GW in 2019 to 114GW in 2023, with a CAGR of 40%, and its component shipments reached 7GW in 2023 [14] - Despite a challenging industry environment in 2023, the company maintained a gross margin of around 20%, although its net margin fluctuated due to factors such as price declines and inventory write-downs [15] Competitive Advantages - TCL Zhonghuan's silicon wafer business has a stable market share of around 30%, and its gross margin of 22% in 2023 is among the best in the industry [24] - The company's R&D investment is significant, with R&D expenses exceeding 2 billion yuan in 2023, and its R&D expense ratio is around 4%, leading the industry [26][27] - TCL Zhonghuan's per capita revenue and salary are among the highest in the industry, with per capita revenue reaching 3.03 million yuan and per capita salary around 190,000 yuan in 2023 [29] - The company's production efficiency and cost control are superior, with its full cost of silicon wafers being 0.03 yuan/W lower than second-tier competitors [30] Future Outlook and Projects - The report forecasts that TCL Zhonghuan's revenue will reach 35.7 billion yuan in 2024, 41.3 billion yuan in 2025, and 46.7 billion yuan in 2026, with net profits of -3 billion yuan, 2.1 billion yuan, and 3.3 billion yuan respectively [3][41] - The company's Middle East project, a 20GW photovoltaic crystal and wafer project in Saudi Arabia, is a strategic move to expand its global presence and enhance its competitive advantage [34][35] Valuation - The report notes that TCL Zhonghuan's PB ratio is at a historical low of around 0.8x, indicating that the stock is undervalued [39][41]