The company released its 2022 annual report, and profits fell 80% year over year. The company's photovoltaic film shipments are growing rapidly, and its profitability is under pressure. It continues to promote research and development of new film products; maintaining the rating for increasing holdings.
Key points to support ratings
Profit in 2022 decreased 80% year on year, profit of 2023Q1 decreased 71% year on year: the company released its 2022 annual report, achieving operating income of 5.307 billion yuan, an increase of 70.90% over the previous year; achieving net profit attributable to shareholders of listed companies of 5.09 million yuan, a decrease of 80.14% over the previous year, after deducting 28.4 million yuan of non-profit profit, a decrease of 88.34% from the previous year. At the same time, the company released the first quarter report of 2023, achieving a profit of 22.75 million yuan in the first quarter, a year-on-year decrease of 70.56%.
Film shipments grew rapidly, and gross margin rebounded in the first quarter of 2023: in 2022, the company achieved sales of 435 million square meters of photovoltaic film, an increase of 76.88% over the previous year. The photovoltaic film business achieved revenue of 5.258 billion yuan, an increase of 72.28% over the previous year. In 2022, the price of EVA resin raw materials dropped significantly, and the price of adhesive film was lowered accordingly. The slow decline in raw material costs led to pressure on gross margin. In 2022, the average settlement price of the company's adhesive film without tax was 12.09 yuan/square meter, a year-on-year decrease of 2.60%, and gross margin fell 7.49 percentage points to 7.43% year-on-year. The consolidated gross margin for the first quarter of 2023 increased 3.31 pct to 6.26% month-on-month.
Continuously promote the development of new adhesive film products: In 2022, the company added a single-layer POE film category and a new EXP film for TopCon, an improved EPE film, and a white co-extruded POE film for the lower layer of TopCon. Under the premise of ensuring the hydrolysis resistance of the film, the amount of POE resin used was reduced by a large percentage, and the amount of adhesive film technology was prepared for the rapid development of TopCon components in the future. At the same time, the company also launched new film products such as high-PID single-layer EVA film and HJT special light-transfer film.
Actively deploying across fields: In 2022, the company added electronic functional films such as dimming films for smart glass for new energy vehicles, and new products such as PVE glass adhesive film for cooling and noise reduction. At the same time, new environmentally friendly surface materials for smart cockpits of automobiles have also made good progress.
valuations
Under the current share capital, based on the company's annual report and industry supply and demand, we adjusted the company's 2023-2025 earnings per share forecast to $5.39/9.08/12.17 (the original forecast for 2023-2025 was 9.05/11.78 /-yuan per share), corresponding to a price-earnings ratio of 22.8/13.5/10.1 times; maintaining the shareholding increase rating.
The main risks faced by ratings
Raw material costs fall short of expectations; price competition exceeds expectations; risk of international trade friction; risk of technology iteration; policies fall short of expectations.