Tianlong Optoelectronics research and development to do a strong role in high-margin

On January 10, 2011, the photovoltaic equipment production plant of Tianlong Optoelectronics (300029) appeared to be a bit empty, and the original monocrystalline silicon growth furnace was basically sold out. The workers in the factory told the China Securities Journal that since the second quarter of 2010, the monocrystalline silicon growth furnace has been in short supply, and the company's production line has expanded production by 70% and is running at full capacity, which is still difficult to meet market demand.

2011 is a crucial year for Tianlong Optoelectronics' multi-type business to “completely bloom”. Chen Long, the director of Tianlong Optoelectronics, told China Securities Journal that after the monocrystalline silicon growth furnace achieved its leading domestic market share, the company has prepared for the mass production of polysilicon ingot furnaces and slicers, polysilicon ingot furnaces and slicers. Will be in volume in 2011.

In addition to photovoltaic equipment, Tianlong Optoelectronics also has a large-scale "betting" LED equipment market that is newer than photovoltaic equipment. In 2011, it will mass produce LED sapphire growth furnaces. The reason is that the replacement of single crystal growth furnace for photovoltaic equipment has been basically completed, and the import substitution of LED equipment market has basically not started. Tianlong Optoelectronics intends to seize the "first place" for localization of LED equipment.

Leading market share

Single crystal silicon growth furnace grows steadily

In 2005, an occasional opportunity for Tianlong Optoelectronics to transform from a traditional equipment manufacturer that produces steel balls to a photovoltaic upstream equipment manufacturer, and became the first domestic enterprise to cut into the field of single crystal silicon growth furnaces.

Since then, the sales of Tianlong Optoelectronics monocrystalline silicon growth furnace equipment have been climbing, forming a relatively stable customer resources and sales channels, and landed on the GEM in 2009.

At this point, the import substitution industry of photovoltaic upstream equipment has gradually become known, showing great development potential. The rapid development of the photovoltaic market in 2010 has provided rare opportunities for many domestic PV equipment manufacturers.

Chen Liu said that the supply and sales of photovoltaic products in 2010 are booming, making the number of imported photovoltaic equipment unable to meet the needs of domestic PV companies. The market demand gap provides space for many emerging domestic equipment manufacturers to survive and develop. Including Tianlong Optoelectronics, Beijing Jingyuntong, Shanghai Hanhong, Zhejiang Shangyu Jingsheng several large equipment manufacturers.

It is precisely because of the development in 2010 that China's photovoltaic monocrystalline silicon growth furnace has basically completed import substitution, the localization rate is as high as 90%, and now there are few domestic PV companies that purchase imported monocrystalline silicon growth furnaces, because domestic equipment is Technically close to the international level.

Tianlong Optoelectronics produced more than 500 single crystal silicon growth furnaces in the first three quarters of 2010. It is expected that the output of 700 units will not be a problem in the whole year. In 2009, the company's monocrystalline silicon growth furnace production was only 400 units. At present, the market share of Tianlong photoelectric single crystal silicon growth furnace has reached 20%-30%.

The Tianlong Optoelectronics IPO fundraising project shows that the company will establish a production line with an annual output of 1,200 single crystal silicon growth furnaces. In this regard, Chen Liu said that to achieve this goal, the market share is very demanding.

In fact, the interest points of Tianlong Optoelectronics have quietly shifted. Chen Liu said that in 2011, the company will not simply pursue the production and sales of single crystal furnaces. The company's strategic focus will gradually shift from single crystal furnace to polycrystalline furnace.

In Chen Liu’s view, the growth of the monocrystalline silicon growth furnace business has entered a “stable period”. As more competitors enter the market, the competition will become more intense in the future, and the company will strive to maintain its current market position in this field. But in the future, more energy will be devoted to developing new equipment.

The yield rate is close to the international level

Polycrystalline ingot furnace "post-production"

After the basic replacement of the single crystal silicon growth furnace, the next step will be the high-tech equipment such as polysilicon ingot furnace and slicer.

Chen Liu told the China Securities Journal that the high level of localization in photovoltaic upstream equipment is basically low value-added equipment. High value-added equipment is usually monopolized by international manufacturers. Some of them began to try to make domestic ingot furnaces. The equipment supplier can only "cross the river by feeling the stones."

It is understood that the localization rate of polycrystalline silicon ingot furnace is only about 20%. At present, GT Solar in the United States occupies more than 70% of the domestic polysilicon ingot furnace, while domestic equipment manufacturers of polycrystalline silicon ingot furnaces are few. Seiko Technology, Shanghai Hanhong Precision (Japan), Beijing Jingyuntong and CLP 48 The field has been relatively early, and Seiko Technology has taken over orders in the second half of 2010.

Compared with the above-mentioned “first movers”, the “post-production” of Tianlong Optoelectronics polysilicon ingot furnace equipment faces many challenges.

The first is how to quickly open up the market. In addition to this, in addition to fully utilizing the accumulated customer resources of the company's monocrystalline silicon growth furnace, Tianlong Optoelectronics will build a polysilicon ingot furnace test demonstration plant project in 2011 to build a 50-75 MW polysilicon wafer production line, which can be fully demonstrated. Stability and yield of ingot furnace equipment.

China Securities Journal reporter saw that 15 polysilicon ingot furnaces for the project have been ready for installation in the plant. At present, the yield of Tianlong Optoelectronics polycrystalline silicon ingot furnace is 68%. This level is already close to the international level. Analysts said that if the price is calculated at 2.8 million yuan per unit, the gross profit margin of the company's business can reach 40%.

However, in the eyes of many industry insiders, the photovoltaic market in 2011 will be a relatively stable year, and it is difficult to reproduce the high growth in 2010. This means that the total demand for equipment from downstream customers will be discounted, which may have a certain impact on the company's launch of new products.

Despite this, Chen Liu is full of confidence in the sales of ingot furnaces in 2011. He said that the company has certain advantages in terms of reputation and customers in the industry compared with other domestic companies. It is understood that some PV companies have expressed their intention to purchase polycrystalline ingot furnace equipment to Tianlong Optoelectronics.

In addition to the ingot furnace, Tianlong Optoelectronics will begin mass sales of wafer cutting machines in 2011. This equipment is used to make silicon wafers into silicon wafers. The company's wafer cutting machine has also been produced in small quantities in 2010.

According to reports, whether it is an ingot furnace or a slicer, the production cycle is only four or five months, so it is difficult to predict the order for the whole year of 2011. However, many PV companies are optimistic about the market demand for photovoltaic equipment such as single crystal furnaces, ingot furnaces and cutting machines. According to Chen Liu's view, the global PV equipment manufacturing industry is shifting to China. The development space of domestic equipment manufacturers is still overall optimistic, but whether there is explosive growth depends on the growth of domestic PV market demand.

Localization of "breaking ice"

Prepare for LED equipment

"Now everyone has seen that making photovoltaics can make money. In fact, the LED lighting market has more potential than the PV market." Chen Liu told China Securities Journal that some localization of photovoltaic equipment has been going on for some time, and LED The localization of upstream equipment can be said that there is still no "ice breaking", and key equipment basically needs to be imported.

After a year of technical reserves, Tianlong Optoelectronics intends to mass-produce the growth furnace of LED raw material sapphire in 2011, and use this as a slit to find the next “breakthrough point” in the LED equipment industry chain.

It is understood that foreign manufacturers have export restrictions on the production process of sapphire, and the price is expensive. However, only the price advantage does not guarantee that the sapphire growth furnace will be able to increase the volume. The reason is that Tianlong Optoelectronics, as one of the few equipment manufacturers involved in this field in China, needs to cultivate the market while producing. After all, the market is just getting started.

At present, Tianlong Optoelectronics is still unable to determine the specific capacity of the LED raw material sapphire growth furnace in 2011. The reason is that the release of production capacity has several constraints. In addition to the company's own production conditions, there is also the technical support for the sapphire growth furnace after-sales, because the commissioning of the equipment after the sale is very important and labor-intensive. In addition, the equipment is also Subject to the number of key components upstream, some of these parts are made by the company, and some need to be purchased from foreign or domestic manufacturers.

Despite this, the market prospects of sapphire growth furnaces are still very optimistic. Analysts said that the current price of sapphire growth furnaces is very expensive, the demand for localization is very large, and the gross profit margin of products is higher than that of photovoltaic equipment with higher localization rate.

Moreover, Tianlong Optoelectronics is more optimistic about the equipment of the LED industry chain. At present, the company is investing huge manpower and material resources, digging talents, investing in gold, and conducting independent research and development of equipment, hoping to find the next breakthrough point.

CITIC Securities researcher Tang Chuan said that with the mass production of Tianlong Optoelectronics polysilicon ingot furnace and sapphire growth furnace, these two high-margin products will drive a new wave of company performance, and its sales revenue will account for 44% of the company's 2012 equipment revenue. .

For the 2011 results, Chen Liu said that in 2011, there will be a number of types of equipment including ingot furnace, slicer, sapphire growth furnace and other mass production at the same time, the performance will certainly increase significantly; but also take into account the company's huge research and development Capital investment may have a short-term adverse effect on performance.

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