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Longji (601012): Release of convertible bonds to escort and expand production to consolidate leading positions and ensure growth

Longji (601012): Release of convertible bonds to escort and expand production to consolidate leading positions and ensure growth
Incident Longji shares announced the proposed public issuance of A-share convertible corporate bonds with a scale of no more than RMB 5 billion. The bond has a maturity of six years and the funds raised will be used for Yinchuan’s 15GW monocrystalline silicon rods, wafer projects, and Xi’an 5GW monocrystalline battery projects. Commenting on accelerating the expansion of monocrystalline silicon wafer production capacity will help the company to consolidate its leading scale and maintain a benign industry competition pattern: continuously changing the rapid progress of monocrystalline growth / slicing process technology, and the widening of the efficiency difference of monocrystalline silicon cells after the expansion of PERC technologyThe single-crystal line index poly-crystalline has continued to increase its cost-effectiveness. Whether it is the capital expenditure of the manufacturing industry chain or the product selection tendency of the end-application conversion, the tendency of the 南京桑拿网 center of gravity to be single-crystalline is very clear.The relatively high profitability of single crystal silicon wafers has gradually attracted participants from outside the two industry leaders to join in the expansion.In the semi-annual report, the company announced that it plans to advance the 65GW silicon wafer capacity target originally scheduled to be achieved by the end of 2021 to the end of 2020. The company’s expansion of production speed will not only consolidate its absolute monolithic wafer leader, but also avoid silicon wafer replacement to a reasonableThe level of return will suppress some of the impulse to expand production in the long tail, and maintain a healthy competition pattern. The industrialization of R & D results was achieved through the expansion of production, which helped successfully transform 北京桑拿洗浴保健 huge R & D expansion into corporate competitiveness: the company’s R & D expenditures in the past three years were as high as 5.6, 11.1,12.3 trillion, the proportion of income reached 4.9%, 6.8%, 5.6%, both in absolute amount and in terms of revenue, are among the top companies in the global industry. This is an important basis for the company to maintain technology and cost leadership for a long time in the rapidly changing and highly competitive photovoltaic manufacturing field.Many of these research and development results need to achieve industrialization and large-scale application through capital expenditures such as expansion of production and technological transformation, so as to contribute to the company’s overall competitiveness.Therefore, we cannot deny that the photovoltaic industry is still rapidly advancing in technology and the market is still expanding rapidly. A large amount of capital strength is an important condition for enterprises to maintain competitiveness and achieve growth. It is expected that the price of monocrystalline silicon wafers will slowly decline in the next year, and the impact on profitability will be limited: the new production capacity of the first and second echelon companies will be released one after another. As monocrystalline silicon wafers are eating away at the polycrystalline market share, the decline in prices is inevitable.However, we judge that the silicon wafer price reduction trend in this step will be relatively moderate and controllable, and in the face of the continuous decline in non-silicon costs, the substitution impact of the price reduction on the company’s wafer gross profit margin is also expected to be reduced by the amount of growthEasy to replace.The recent significant drop in prices of polycrystalline batteries may cause some battery capacity to switch back to the production of single crystal cells, thereby forming new support for the price of short-term single crystal silicon wafers. Profit adjustment and investment recommendationsThe 21-year net profit forecast is US $ 5,470,86 billion. Due to the completion of the company’s previous conversion of convertible bonds, the total share capital increased, and the corresponding EPS was adjusted to 1.43,1.86, 2.27 yuan, maintain “Buy” rating, target price of 33.5 yuan, corresponding to 18 times PE in 2020. Risks suggest that domestic policies are lower than expected, the international trade environment has deteriorated, and product prices have fallen more than expected.