Core viewpoints

The company released its third quarter report. In the first three quarters of 2023, the company achieved an operating income of 18.788 billion yuan, an increase of 114.83% over the same period last year, and a net profit of 1.403 billion yuan, an increase of 68.98% over the same period last year. The non-return net profit was 1.313 billion yuan, an increase of 64.73% over the same period last year.

The company's third-quarter performance was eye-catching, and its net profit increased by 576.7% month-on-month. We expect Q3 wafer profitability to increase month-on-month, and wafer production capacity is expected to reach 85GW in 24 years.

During the reporting period, the company's equipment business newly signed orders grew rapidly, and the layout of hydrogen energy business took the lead. In addition, the operating capacity of the company improved and the operating cash flow improved during the reporting period.

Event

The company released its third quarter report.

In the first three quarters of 2023, the company achieved an operating income of 18.788 billion yuan, an increase of 114.83% over the same period last year, and a net profit of 1.403 billion yuan, an increase of 68.98% over the same period last year. The non-return net profit was 1.313 billion yuan, an increase of 64.73% over the same period last year. From a quarterly point of view, 2023Q3 achieved revenue of 6.659 billion yuan, an increase of 49.68% over the same period last year, and a net profit of 785 million yuan, an increase of 64.61% and 576.7% over the same period last year.

Brief comment

The performance in the third quarter was eye-catching, with net profit growing by 576.7% month-on-month.

The company performed brightly in the third quarter, with revenue of 6.659 billion yuan, an increase of 49.68% over the same period last year, and a net profit of 785 million yuan, an increase of 64.61% over the same period last year, and an increase of 576.7% over the previous year. At the same time, the company's weighted average return on equity reached 10.37% in the third quarter, an increase of 0.92pct over the same period last year.

The profitability of Q3 wafers has increased month on month, and the production capacity is expected to reach 85GW by the end of the 24th.

We expect the company to ship 9.5-10.5GW wafers on Q3 wafers, with a net profit of about 5-7 cents per watt per watt and improved profitability compared with the previous month. By the end of June 23, the company's nominal production capacity 40GW, we expect the company's third phase of silicon wafer project Q2 to be put into production in batches in 24 years, and the company's nominal production capacity is expected to reach 85GW by the end of 24.

The newly signed order of equipment business is growing rapidly, and the layout of hydrogen energy business is leading.

In terms of hydrogen energy business, the company's electrolytic cell production capacity of 300 units has reached production in the first half of the year, the company has its own testing system to speed up product iteration, electrolytic cell product power industry leading, the company is expected to 24 years of new energy equipment revenue growth of more than 20%. In addition, the order for air cooling towers in energy-saving and water-saving equipment is close to 3 billion, and the newly signed order doubled in the first half of the year compared with the same period last year, and is expected to further increase in the second half of the year.

The operating capacity has been improved and the operating cash flow has improved.

During the reporting period, the turnover rate of the company's total assets increased significantly, while the expense rate decreased significantly compared with the same period last year. The company's total asset turnover rate reached 0.74 in the first three quarters of 2023, compared with 0.54 in the same period last year. The company's expense rate reached 5.14% in the first three quarters of 2023, down 3.0pct from the same period last year. At the same time, the company's cash flow improved significantly. The net cash flow generated by the company's operating activities reached 540 million yuan in the third quarter of 2023, turning from a loss in the second quarter to a positive one. In the first three quarters of 2023, the net cash flow generated by the company's operating activities reached-231 million yuan, an increase of 91.62% over the same period last year.

Profit forecast: we expect the company to return to its parent net profit of 19.0,24.6 and 3.05 billion yuan from 2023 to 2025, corresponding to a PE valuation of 9.94,7.68,6.19 times on October 20, 2023, maintaining a "buy" rating.

Risk analysis.

1. The risk of price fluctuation of products and raw materials. The price of raw materials in the upstream of the company's energy-saving and water-saving products fluctuates frequently, and the photovoltaic business is greatly affected by the price of silicon. If the follow-up upstream raw material prices fluctuate sharply, the company's profitability will be adversely affected.

2. Market competition aggravates the risk. In recent years, the photovoltaic industry continues to expand, if the company cannot make use of its competitive advantage to further consolidate and enhance its existing market position, enhance product quality and reduce production costs, the company will face the risk of loss of competitive advantage and decline of market share and profit level.

3. The project progress falls short of the expected risk. The company's wafer business is in a critical period of capacity climbing, if the company's wafer capacity is not as expected, the company's performance and profitability will be greatly affected.