2023H1's performance has grown steadily, and the optimization of product structure has brought about improved profitability.
Jiangsu Tongling Electric Co., Ltd. officially launched the photovoltaic module junction box project in 2005, and has gradually grown into a leading enterprise in the production and sales of photovoltaic module junction boxes. 2023H1 achieved an operating income of 712 million yuan, an increase of 14.75% over the same period last year, and a net profit of 84 million yuan, an increase of 80.06% over the same period last year. Under the combined effect of the overall shock and decline in the purchasing prices of major raw materials and the steady increase in the company's chip junction box shipments, the company's 2023H1 gross profit margin increased by 8.39 pct year-on-year to 21.70%, with a relatively abundant cash balance of 903 million yuan at the end of the period.
The boom in the industry has boosted demand, and the global demand for photovoltaic junction boxes is expected to exceed 960 million sets in 2025.
Although the demand for single GW junction boxes will enter the downstream channel with the continuous improvement of the power of module products in the future, under the background of the rapid growth of global photovoltaic installed scale, according to our estimation, the global photovoltaic junction box market space will maintain a steady growth trend. It is estimated that the global photovoltaic junction box market demand will reach 96047 million sets in 2025 (3-year CAGR is 19.87%), corresponding to the market space of about 19.6 billion yuan.
The market share increases steadily, and the product iteration thickens the profit.
(1) all the indicators of the company's products are leading in the industry, with high customer recognition, and the market share of junction box sales reached 13.97% in 2022, maintaining a good momentum of steady increase in market share under the background of accelerated photovoltaic demand release. (2) the company's new generation chip junction box has higher product rate, reliability and better heat dissipation performance. A single chip can carry large current and can better adapt to higher power component products. Under the background of the continuous improvement of photovoltaic module power, the company's chip junction box sales are expected to grow rapidly. Its unit cost is lower than that of the diode junction box (the 22-year gross profit margin of the chip / diode junction box is 18.23% and 13.64% respectively), and the increase in the proportion of shipments is expected to improve the company's profitability, thereby thickening the company's profits.
For the first time, coverage gives a "buy" rating: we expect the company's 2023-25 return net profit to be RMB 255,000,000,000, corresponding to EPS of RMB2.13A, and the current share price is 23-25 PE times that of 19-13-10. Under the background of the rapid growth of photovoltaic installed demand and the product upgrading demand brought about by the launch of high-power components, the company's brand and product competitiveness will ensure the continuous improvement of the company's junction box product shipments. At the same time, the company's continuous investment in research and development and the introduction and large-scale shipment of high-quality products in customers will make the company's chip junction box shipments continue to improve and bring profitability improvement, giving the company a reasonable valuation level (PE) of 18 times in 2024, corresponding to the target price of 58.22 yuan, giving the "buy" rating for the first time.
Risk hint: the newly installed scale of photovoltaic is less than expected; the price of junction box products decreases more than expected due to the intensification of competition in the industry; and the sales of chip junction box are not as expected.