Longji shares (601012) semi-annual review in 2019: a new starting point for the market value of 100 billion yuan

Longji shares (601012) semi-annual review in 2019: a new starting point for the market value of 100 billion yuan
Brief comment on the results Longji shares announced the first half of 2019 results, achieving revenue of 14.1 billion US dollars (ten years + 41%), net profit of 20.1 ‰ (previously + 54%, deduction + 59%), in line with the scope of performance forecast and market expectations. Operational analysis Non-silicon costs have fallen rapidly, driving the continuous improvement of gross profit margin: The company has achieved a 32% reduction in non-silicon costs for H1 silicon wafers in 2019 through improvements in equipment processes, management improvements and other methods.Every time the comprehensive gross profit margin increases by 3.6pct to 26%, while Q2 single quarter comprehensive gross profit margin rose 4 from Q1.5pct to 28%, showing strong technical progress. Rely on technology and cost advantages to accelerate expansion and stay on the leading scale: Against the background of the increasingly cost-effective advantages of the single crystal route, the company adheres to the principle of “not leading and not expanding production” and confirms significant technological and cost advantages.Under the circumstances, the pace of production expansion is accelerating, and it is currently expected that the 65GW silicon wafer capacity originally planned to be reached by the end of 2021 will be realized one year in advance to the end of 2020.We expect the company to start at 45?The 50% market share is firmly on top of the absolute leader in the monocrystalline wafer industry. The proportion of overseas sales of module business has increased significantly, and profitability may exceed expectations: After years of early work (product certification, channel construction, brand promotion, etc.), the company’s overseas sales of modules have accumulated this year and overseas sales in the first half of the year.4GW, accounting for 76%.The company’s module products have recently received the highest product financing rating from multiple international authoritative photovoltaic rating agencies, so that overseas power plant owners who use the company’s module products can obtain project financing at cost, and this financing cost advantage brings project excess benefits, Will be shared by the company in the form of product sales premium.At the same time, under the overlapping effect of the ITC compensation in the US market, which is about to be refunded, and the double-sided module exemption from 201 tariffs, the company ‘s Malaysian battery module production capacity is expected to provide a considerable profit 杭州夜网论坛 contribution with a higher gross margin in the next two years. The operating cash flow has improved significantly and the future trend is good: in the past few years, the company’s rapid expansion of production capacity, core business from silicon wafers to modules, and module business from domestic to international markets, all have an impact on operating cash flowThe overseas layout of the integrated component business has been gradually completed, and the proportion of overseas sales has increased (receipt is better than domestic). The semi-annual report of cash flow has improved significantly, 24.The $ 300 million net operating cash limit increased to 108% and exceeded the half-year net profit margin of $ 2 billion. Profit adjustment and investment recommendations. Considering the company’s production expansion rate, non-silicon costs are falling faster than expected. We appropriately raise our silicon wafer production forecast and lower our non-silicon cost forecast. After adjustment in 2019?The 21-year net profit forecast is 54 (+ 5%)), 70 (+ 10%), 86 (+ 10%) trillion, and the corresponding EPS is 1.49, 1.94, 2.36 yuan, maintain “Buy” rating, 6-12 months target price raised to 38 accordingly.8 yuan (+ 10%), corresponding to 20 times 2020 PE. Risk reminder: the demand release of bidding projects is less than expected; the new entrants in the industry are expanding production faster than expected; the international trade environment is deteriorating