The Zhitong Finance App learned that Minsheng Securities released a research report stating that photovoltaic silver paste is a core auxiliary material for preparing metal electrodes for photovoltaic cells, which directly affects the photoelectric performance of batteries. The cost of silver paste accounts for about 35% of the non-silicon cost of photovoltaic cells, making it the largest non-silicon cost of photovoltaic cells. In the context of the acceleration of N-type iteration in 24 years, the silver paste industry is expected to see a sharp rise in quantitative profit. It is recommended to focus on domestic silver paste leaders Dike Co., Ltd. (300842.SZ), Polymeric Materials (688503.SH), and Suzhou Goodtech (002079.SZ).

▍ The main views of Minsheng Securities are as follows:

Photovoltaic silver paste is the core auxiliary material for photovoltaic cells.

Photovoltaic silver paste is a core auxiliary material for preparing metal electrodes for photovoltaic cells, which directly affects the photoelectric performance of the battery. The cost of silver paste accounts for about 35% of the non-silicon cost of photovoltaic cells, making it the largest non-silicon cost of photovoltaic cells.

N-type iteration is accelerating, and the silver paste process is expected to increase rapidly.

1) Volume increase: N-type batteries have higher silver consumption, and N-type battery volume is expected to drive up demand for silver paste. The penetration rate of TopCon batteries was about 8.3% in '22, and in '23, with large-scale production of TopCon production, according to InfoLink's forecast, the penetration rate of TopCon batteries was about 30% in '23, and the penetration rate is expected to exceed 70% in '24; HJT and BC capacity construction is accelerated, and the penetration rate is expected to increase. According to CPIA, compared with PERC's pure silver consumption, TopCon battery's single-chip silver paste consumption increased by nearly 80%, and HJT batteries almost doubled. The silver consumption of N-type batteries is significantly higher than that of P-type batteries, so the demand for silver paste is expected to increase with the volume of N-type batteries. According to estimates, global demand for PV silver in 23-25 was 4681, 6356, and 7265 tons, respectively, with growth rates of 77%, 36%, and 14%, respectively. The market demand is broad.

2) Profit increase: The processing cost of silver paste for N-type batteries is higher, and the introduction of LECO boosts the premium. The price of silver paste is priced using the silver price+processing fee model. The technical difficulty of silver paste for N-type batteries is higher, and the processing fee premium is obvious. Compared with PERC silver paste, the current processing fee premium for TopCon silver paste is 40%-50%, and the processing fee premium for HJT silver paste is higher. LECO can help increase TopCon's efficiency by more than 0.3%, and the industry is expected to introduce it on a large scale in 24H1; LECO requires special silver paste with low aggressiveness, which is more difficult in terms of technology, and is expected to significantly increase the silver paste processing fee premium.

Accelerate the introduction of domestic silver powder to promote supply chain security and cost reduction.

Silver powder accounts for up to 98% of the raw material cost of photovoltaic silver paste. Currently, PERC silver powder has basically been localized. Localization of TopCon silver powder is accelerating, and HJT still mainly imports silver powder. The price of domestic silver powder is usually lower than that of imported silver powder. Domestic substitution helps promote supply chain security and reduce costs for silver paste companies. In addition, silver paste companies have extended their layout upstream, increased the proportion of silver powder self-supply, promoted the localization process of silver powder, and further reduced costs.

N-type silver paste has a better competitive pattern, and the concentration of leaders is expected to increase.

PERC has many suppliers, including around 20 manufacturers such as Juhe, Heraeus, Dike, Jingyin, Shuohe, Soter, and Shangyin. According to the CPIA, in '22, the market shares of Juhe, Dike, and Jingyin, which ranked the top three domestic silver products, were 41%, 22%, and 13%, respectively. TopCon silver paste technology is more difficult. Currently, there are no more than 10 manufacturers that can supply it in batches, and the competitive pattern is better. The total market share of Dike and Juhe, which ranked top two TopCon silver in '23, reached more than 80%, and the concentration is significantly higher than PERC silver. The acceleration of N-type iteration is expected to increase the concentration of the silver paste industry.

Risk warning:

Downstream demand falls short of expectations, N-type iterations fall short of expectations, raw material prices fluctuate, etc.