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On February 15, 2023, Zhang Yuzheng, the shareholder of the company, transferred 106 million shares to Zhejiang Power by agreement, while Lin Jianwei, the former controller, entrusted his 109 million voting shares to Zhejiang Power in the next 36 months. After the completion of this transaction, Zhejiang Power will hold 106 million Zhonglai shares (9.70% of the company's total share capital) and control 215 million voting shares (19.70% of the company's total share capital). The controlling shareholder of the company was changed from Mr. Lin Jianwei and Zhang Yuzheng to Zhejiang Electric Power, and the actual controller was changed to Zhejiang SASAC.

Guoxin Dianxin new point of view:

1) the company has been deeply engaged in the photovoltaic industry for many years, and many businesses are in a period of rapid expansion. After Zhejiang Neng Power takes ownership, it is expected to bring significant support to the company in terms of capital cost and industrial resources, and strengthen the company's competitiveness in photovoltaic backplane, N-type TOPCon battery, distributed system and other fields.

2) Battery module: the company prospectively carries on the R & D layout in the N-type TOPCon battery technology route, and the GW-level battery capacity has been built in 2019. At present, TOPCon technology has evolved to version 3.0, and the battery capacity is also accelerated, which is expected to fully enjoy the N-type battery technology dividend. 3) Photovoltaic system: in the history of the company, the company has deeply cooperated with SPIC to carry out distributed photovoltaic business, and the two sides complement each other to strengthen the competitiveness of the joint venture in the distributed field. With the reform of consumer-side electricity price policy and the decline of silicon cost, the domestic distributed photovoltaic market shows a good momentum of development, and the photovoltaic system business is expected to achieve rapid growth.

4) Photovoltaic backplane: with the rapid decline of upstream silicon prices, the photovoltaic industry has ushered in a stage of rapid development. As a leading photovoltaic backplane enterprise, the company leads the industry in terms of shipments and profitability, and its production capacity is still in a period of rapid expansion in the next 3 years. It is expected to benefit from the high magnanimity of the downstream market. To sum up, we expect the company to achieve operating income of 974 million yuan in 2022-2024, an increase of 67 percent, 52 percent, 36 percent, and a year-on-year increase of-215 percent, 153 percent, 61 percent, respectively, to achieve a net profit of 3.6 yuan, 9.1 percent, and 61 percent, respectively, compared with 52-20-13. Considering the FCFF valuation and the relative valuation, we believe that the reasonable valuation range of the company's stock price is RMB 18.1-19.4, corresponding to the dynamic PE range of 21.7-23.3 times in 2023, which is a premium of 5% to 13% over the company's current share price. Coverage for the first time, giving a "overweight" rating.