Events:

On August 19, 2023, the company released its half-yearly report for 2023. In the first half of 2023, the company realized operating income of 649 million yuan, an increase of 20.02% over the same period last year, a net profit of 88 million yuan, an increase of 86.16% over the same period last year, and a net profit of 82 million yuan, an increase of 81.32% over the same period last year.

The performance continued to improve, and the net profit increased by more than 80%:

In the first half of 2023, according to the data of the National Energy Administration, the domestic photovoltaic installed capacity 78.42GW increased by 153.95% from January to June compared with the same period last year. With the remarkable growth of the global photovoltaic market, the market demand for photovoltaic module core accessories photovoltaic junction boxes and photovoltaic connectors has also greatly increased. The company closely revolves around the technology development route of component manufacturers, constantly improving product performance and meeting customer needs. At the same time, actively open up new customers, performance made new breakthroughs. In the first half of 2023, the company realized operating income of 649 million yuan, an increase of 20.02% over the same period last year. From a business point of view, revenue from photovoltaic junction box products reached 544 million yuan, an increase of 26.57% over the same period last year, while revenue from photovoltaic connector products reached 93 million yuan, down 8.90% from the same period last year. Due to the increase in the number of sales staff and managers and salaries after the listing of the company, the company's sales expenses increased by 194.78% compared with the same period last year, and management expenses increased by 66.53% compared with the same period last year. Benefiting from the improvement in operational efficiency, the company achieved a net profit of 88 million yuan in the first half of the year, an increase of 86.16% over the same period last year.

Significant improvement in profitability and strong technical manufacturing capability

Driven by the decline in raw material prices, the company's production efficiency and operational efficiency, the company's profitability has rebounded significantly. The company's gross profit margin rose 5.55 percentage points year-on-year to 21.19% in the first half. From a business point of view, the gross profit margin of photovoltaic junction boxes was 20.07%, up 4.09 pct over the same period last year; the gross profit margin of photovoltaic connectors was 24.81%, an increase of 10.40pct over the same period last year. The company's net interest rate rose 4.79 percentage points year-on-year to 13.49% in the first half of the year. The company has strong technical manufacturing capacity and currently has three production bases, which are located in Suzhou and Huai'an City in China, and Beijiang Yunzhong Industrial Zone in Vietnam, covering an area of more than 50000 square meters. The company's product testing center is a testing laboratory authorized by China National Accreditation Committee for conformity Evaluation (CNAS), and has established the recognized Tamiv Nande eyewitness laboratory in Germany and UL eyewitness laboratory in the United States, always keeping the product performance to the world's advanced standards.

The industry maintained a high demeanor, and Vietnam's production capacity went off the line smoothly.

With the gradual acceleration of the process of energy transformation, driven by market demand and various industrial policies, the photovoltaic industry continues to maintain a high degree of prosperity. According to the report of the China Photovoltaic Industry Association, on the manufacturing side, the production of polysilicon, silicon wafers, battery wafers and modules increased by more than 60% in the first half of 2023 compared with the same period last year; on the application side, domestic photovoltaic installed 78.42GW increased by 154% in the first half of 2023 compared with the same period last year. The company has always focused on the electrical protection and connection of solar photovoltaic modules and photovoltaic power stations in the new energy industry. In March 2023, the company obtained the world's first 2000V photovoltaic connector product certification in South Germany, which also means that this product has successfully passed the PPP 58211A:2022 standard. In May 2023, Vietnam Kuaike, a wholly owned subsidiary of the company, successfully ran off the first locally produced radiation photovoltaic cable in Vietnam, indicating that Vietnam has been able to fully realize the production and manufacture of junction box system products. it also shows that China's products in the field of photovoltaic connection have taken an important step from "products abroad" to "industry abroad".

Investment advice:

The company's performance has maintained rapid growth, the forward-looking layout of the field of intelligent junction boxes, and the continuous expansion of production capacity. We expect the company's operating income from 2023 to 2025 to be 1.631 billion yuan (+ 48.3%), 2.341 billion yuan (+ 43.5%) and 3.262 billion yuan (+ 39.3%), respectively. The estimated net profit is 214 million yuan (+ 80.5%), 331 million yuan (+ 55.1%) and 458 million yuan (+ 38.2%), respectively, and the corresponding EPS is 2.57,3.98 and 5.51 yuan respectively. We give the company 22 times PE in 2023, corresponding to the target price of 56.54 yuan, and maintain the "buy-A" investment rating.

Risk tips: the risk of being greatly affected by changes in industrial policy in the photovoltaic field, intensified market competition, rising prices of raw materials, and the risk that R & D results fall short of expectations.