The 2022 performance came under pressure. After entering the photovoltaic business, 2023Q1 turned a loss into a profit, maintaining that the “buy” rating company published its 2022 annual report and the first quarter report of 2023, achieving revenue of 198 million yuan (+11.91%) in 2022, with net profit of -162 million yuan (+23.03%), mainly because the garden business was affected by the continued downturn in the real estate industry and increased competition in the municipal garden construction business. At the same time, the company entered the photovoltaic business in December 2022.

2023Q1 achieved revenue of 171 million yuan (+607.58%) and net profit of 12 million yuan (+214.39%), turning its performance into a profit. 2023Q1's photovoltaic module and battery production capacity has been steadily implemented, and the company's performance and gross profit improved markedly after the PV business was installed. The gross sales margin increased from 10.63% in 2022 to 21.21% in 2023Q1. We raised the 2023-2024 profit forecast and added the 2025 profit forecast. The estimated net profit for 2023-2025 is 0.51/0.61/077 million yuan (the original value of 2023-2024 was 0.25/042 million yuan), corresponding to EPS 0.08/0.09/0.12 yuan/share. The PE corresponding to the current stock price is 66.7/55.8/43.9 times, maintaining the “buy” rating.

The production capacity of the photovoltaic business has gradually been implemented. The Xuzhou base's 1.5GW module and 0.5GW battery production company has obtained 51% of the shares of four companies including Jiangsu Guosheng Shian and Anhui Guosheng New Energy, and 100% of the shares of three companies including Anhui Guosheng Crystal Silicon, successfully integrated into the photovoltaic business. The company has set up heterojunction industrial chain bases in the three provinces of Jiangsu, Anhui and Hebei. In terms of production capacity, according to the company's fixed increase fund-raising application, the equipment for the Jiangsu Guosheng Shian 1.5GW heterojunction module production line has been completed, and trial production will be carried out at the end of January 2023; the 1GW heterojunction battery production line will be put into operation at half of its production capacity in March 2023 and August 2023, respectively.

The 1GW large-size PERC module project at the Lieshan base of Anhui Guosheng New Energy was put into operation in November 2022, and production capacity is currently climbing. We believe that heterojunction is expected to become the next generation of mainstream battery technology with its advantages of high efficiency and high power generation, and 2023 will be the year in which the key technologies for reducing costs and increasing efficiency of heterojunction will be implemented. As a new manufacturer entering the field of heterojunction batteries and modules, the company has strong technical and R&D capabilities, and its lightweight packaging has benefited from the further development of the industry.

The transfer of control rights is progressing in an orderly manner, and the fixed increase has been accepted by the Shanghai Stock Exchange

The transfer of company control is progressing in an orderly manner. Currently, the fixed price increase for Qianjing Garden to issue shares to Guosheng Energy has been accepted by the Shanghai Stock Exchange. It still needs to be reviewed and approved by the Shanghai Stock Exchange and the Securities Regulatory Commission making a registration decision.

Risk warning: The transfer of control has not been implemented; the progress of HJT commissioning and the introduction of cost reduction and efficiency technology has fallen short of expectations.