Incident: The company released its 2022 annual report & 2023 quarterly report. It achieved operating income of 45.974 billion yuan in 2022, an increase of 18.29% over the previous year, and achieved net profit of 4,023 billion yuan, an increase of 18.31% over the previous year; it plans to distribute a cash dividend of 0.4 yuan (tax included) per share. In the first quarter of 2023, the company achieved operating income of 15.741 billion yuan, an increase of 47.37% over the previous year, and achieved net profit of 1,202 billion yuan to the mother, an increase of 109.78% over the previous year.
The low-voltage electrical appliance business is developing steadily, and the household distributed photovoltaic business has maintained a high increase.
(1) In the low-voltage electrical appliance business, the company continued to deepen its Blue Ocean campaign, achieving a coverage rate of over 96% for prefecture-level markets and 88% coverage at district and county levels; international localization business progressed steadily, with international business revenue increasing 46.47% year-on-year to 3.765 billion yuan in 2022; in 2022, the company's low-voltage electrical business revenue fell slightly by 0.65% year-on-year to 19.528 billion yuan. (2) Photovoltaic business, the company's advantage business, the distributed photovoltaic business for household use, maintained a high increase. The new installed capacity exceeded 7 GW in 2022, accounting for 30% of the country's new installed capacity of household photovoltaics. The number of power plants sold exceeded 3 GW. By the end of 2022, the scale of self-owned household photovoltaic power plants had increased 79.62% year-on-year to 9.64 GW, driving the revenue of the photovoltaic sector to increase 39.72% year-on-year to 25.651 billion yuan.
2023Q1's low-voltage electrical appliances and new energy businesses maintained a steady development trend. As of the end of the first quarter of 2023, the company's installed capacity of photovoltaic power plants reached 11.35 GW (+31.46% year on year), of which household use reached 8.97 GW (+52.01% YoY) and power generation reached 2,748 million kilowatt-hours (+26.02% year-on-year).
The PV inverter and energy storage business was increased, and the inverter production capacity was increased to 10 GW.
After transferring photovoltaic module assets, the company plans to integrate photovoltaic inverter and energy storage business assets through the acquisition of control rights of Tongrun Equipment. On the one hand, Zhengtai Power, a holding subsidiary of the company, increased the development of key global markets and domestic advantageous markets. In 2022, the commercial market share of inverters in North America ranked first for 6 consecutive years, the market share of the Korean market rose to number one, and domestic household shipments increased 160% year-on-year. On the other hand, it continued to improve the product range and supplement production capacity. At the end of 2022, inverter production capacity increased to 10 GW, laying a solid foundation for subsequent market expansion.
Maintaining the “buy” rating: Affected by consumer pressure, the growth rate of the domestic household photovoltaic market has slowed down. We lowered the company's profit forecast. We expect the company to achieve net profit of 53.09/57.33/6140 billion yuan in 23-25 (14% down/ 17% down/increase of 17% /increase), corresponding to EPS 2.47/2.67/2.86 yuan. The current stock price corresponds to PE 11/10/9 in 23-25. The high level of prosperity in the photovoltaic industry continues, and the market share of the company's household photovoltaic business is expected to increase further. The inverter and energy storage business is expected to contribute to new performance increases, while the new energy (mainly new energy vehicles) and power equipment (mainly the State Grid and related power groups) sectors among downstream low-voltage appliance customers will also maintain rapid growth in the context of “carbon neutrality” and maintain the “buy” rating.
Risk warning: The new installed capacity of photovoltaics falls short of expectations; grid investment falls short of expectations; overseas business operation risks.