The company announced that it achieved revenue, net profit, and non-attributable net profit of 13.32, 103, and 100 million yuan in the first half of the year, up 98.12%, 153.5%, and 194.5% year-on-year. Among them, Q2's quarterly revenue, net profit, and non-net profit of 7.57, 0.68, and 65 million yuan, respectively, increased 97.09%, 141.67%, and 144.36% year-on-year. Performance increased rapidly and exceeded market expectations.
Performance is growing rapidly. In the first half of the year, the company's revenue and profit mainly came from the environmental protection equipment business, with completed sales of 1.28 billion yuan (the business was 1,406 billion yuan for the full year of 2022), a sharp increase of 92% over the previous year, gross profit margin of 27.9%, and a slight increase of about 2.5 pcts. The expansion in business scale led to an effective dilution of sales expenses down 1.6 pcts from the same period last year. The 134% increase in management expenses was mainly due to equity incentives and team expansion. R&D expenses increased by 112%, and credit impairment in the first half of the year was about 46 million yuan. In the first half of the year, the company achieved a fixed increase of 4.2 billion yuan, cash at the end of the period was nearly 1 billion dollars, and the debt ratio after excluding advance receipts decreased by about 2 pcts over the same period last year by 58.5%.
A leading enterprise in photovoltaic environmental protection equipment, benefiting from battery upgrades and production capacity expansion. In the past, profits in the battery sector continued to recover after the supply and demand situation stabilized, and at the same time, N-type substitution was technically initiated, so the industry has entered a new round of expansion. The company is a leading supplier of supporting equipment such as photovoltaic cell exhaust gas, wastewater treatment, and pure water. It has the highest share in the field of battery exhaust gas and wastewater treatment. It has fully benefited from this round of expansion of production. Considering that the TopCon process process is longer, the unit value of corresponding environmental protection equipment has increased significantly compared to PERC. By the end of the reporting period, the company had contract liabilities of 574 million dollars (at the end of 2022, 2023Q1 were 0.72 million and 259 million yuan respectively), and full orders in hand supported the company's environmental equipment business to continue to grow at a high rate.
Invest in the construction of a TopCon battery production line to expand into N-type battery manufacturing. At the beginning of the year, the company announced that it plans to build the 24GWTopCon battery project in stages. According to the announcement, the procurement of the first phase of 9GW equipment was completed in July. It is expected that entry into the market will be completed in September, and production will be gradually put into operation during the year. Currently, the actual supply and demand situation for N-type TopCon batteries is relatively tight. If the company successfully puts it into production, it will make a greater contribution to next year's performance. The company's own supply of environmental protection equipment has a certain cost advantage, which may be reflected in future profit levels.
The carbon sequestration business is expected to form a new growth pole in the future. The company's carbon sequestration plan uses materials such as steel slag to capture CO2, then mix it with materials such as ore powder and fly ash to prepare ultra-fine, highly active composite ore powder, which is used in cement, concrete and other related industries to achieve both carbon reduction goals and solid waste treatment. In November 2022, the first phase of the company's first cooperation project was put into operation, and contributions began gradually. The company's carbon sequestration business is currently a relatively rare carbon recovery model that can be profitable through market-based methods. Currently, domestic cement carbon emissions and steel slag are huge. If the economy of the company's solid-state business is further confirmed and the potential economy of carbon emission reduction is considered, there may be quite a bit of room for promotion in the future.
Investment advice: It is predicted that in 2023 and 2024, the company will achieve a net profit of 2.7 to 930 million dollars, and maintain the “highly recommended” rating.
Risk warning: Downstream production expansion falls short of expectations, new business falls short of expectations, and raw material prices fluctuate.