Incident: The company released its semi-annual report for 2023, achieving operating income of 10.246 billion yuan, an increase of 9.35% over the previous year; realized net profit of 1,212 billion yuan, an increase of 52.03% over the previous year; realized net profit of 1,249 billion yuan, an increase of 88.36% over the previous year. In the second quarter of 2023, the company achieved operating income of 5.614 billion yuan, an increase of 12.88% over the previous year, and achieved net profit of 629 million yuan, an increase of 45.84% over the previous year. In the first half of 2023, the company's overall gross profit margin was 22.98%, an increase of 6.31 pct over the previous year.
Comment:
Production capacity is being expanded in an orderly manner, and market expansion efforts have been increased.
As of June 30, 2023, the company's magnetic materials industry has an annual production capacity of 220,000 tons of ferrite pre-fired materials, 162,000 tons of permanent ferrite, 50,000 tons of soft magnets, and 25,000 tons of plastic magnets. It is the world's largest manufacturer of ferrite magnetic materials; the new energy industry has an internal production capacity of 8GW batteries, 7GW components and 7GWh lithium batteries per year.
By sector, photovoltaic product revenue was 6.797 billion yuan, +15.95%, gross profit margin 24.32% year on year, +11.09 pct; magnetic materials revenue was 1,822 billion yuan, -15.01%, gross profit margin 26.61% year on year, +3.22 pct.; lithium battery revenue was 939 million yuan, +15.45%, gross profit margin 12.24%, year-on-year; device revenue was 362 million yuan, -3.45% year on year. In the first half of 2023, the company's domestic revenue was 3.623 billion yuan, -17.00% year on year, gross profit margin 19.35% year on year, +4.74 pct year on year; overseas revenue was 6.414 billion yuan, +30.21% year on year, gross profit margin 25.48%, +7.07 pct year on year.
The photovoltaic business is growing rapidly, speeding up the construction of N-type TopCon production capacity.
The company's photovoltaic business implemented a differentiated strategy. 2023H1 achieved battery export sales of about 1.2 GW, module shipments exceeded 3.3 GW, and module shipments increased 50% year-on-year. In January 2023, the company announced that it plans to build a topcon battery project with an annual output of 12 GW/year in Yibin, Sichuan. The first phase of the 6GW battery is scheduled to be basically completed by the end of December 2023. At the same time, the company launched a new N-type TopCon module. The power can achieve full coverage of 415W-630W, and the maximum conversion rate can reach 22.45%.
Profit forecasting, valuation and rating: The company's magnetic materials business is developing steadily, and the photovoltaic business has achieved rapid scale expansion through the N-type TopCon battery project. We maintain our 2023-25 net profit forecast of 21.07/26.43/32.88 billion yuan. The current stock price corresponds to 13 times PE in 2023. The company has a stable market position, production capacity is expanding in an orderly manner, and is expected to achieve long-term development and maintain a “buy” rating.
Risk warning: risk of fluctuations in raw material prices, risk of fluctuations in downstream demand, risk of increased market competition.