Event: on October 20, 2023, the company released its third quarterly report for 2023. In the first three quarters of 2023, the company realized operating income of 18.788 billion yuan, + 114.83% year-on-year, and net profit of 1.403 billion yuan, + 68.98% compared with the same period last year. Q3 achieved revenue of 6.659 billion yuan in a single quarter, + 49.68% year-on-year and-0.09% month-on-month, and realized a net profit of 785 million yuan, + 64.61% and + 575.21%, respectively.

The production capacity has been accelerated and the profits of silicon wafers have improved. As of 2023Q3, the first and second phase of the company's wafer project has reached production, and the design capacity has reached 40GW. The third phase of the wafer project is under construction and 24Q2 is expected to be put into production. On the sales side, the price of the photovoltaic industry chain stopped falling in the third quarter to maintain stability, and the highest average price of 182 silicon wafers rebounded to 3.35 yuan per chip; on the cost side, the company's quartz sand supply capacity is strong, and non-silicon costs can be effectively controlled. Q3 single-quarter company is expected to ship 10GW silicon, single W net profit of about 6 points. The release of profits from the silicon wafer business has greatly improved the overall profitability of the company. 2023Q3's single-quarter gross profit margin and net profit margin are 20.44% and 12.31% respectively, compared with + 7.43pct and + 10.06pct respectively.

The market share of equipment is in the lead, and there are plenty of orders on hand. In the first three quarters of 2023, the company's energy-saving and water-saving equipment and new energy equipment orders are full: (1) in terms of energy-saving and water-saving equipment, the company won the bid for a number of air cooler projects in June-July, and completed the supply contract in the third quarter. It is expected that the order amount of energy-saving and water-saving equipment (including bromine coolers, air coolers and heat exchangers) in the first three quarters is more than 5 billion yuan. (2) in terms of new energy equipment, the company has a market share of more than 65%, and on-hand orders have maintained steady growth. In October, the company signed a 275 million yuan reduction furnace supply contract with Xining Hongshi Trading Co., Ltd. (a wholly-owned subsidiary of Asian silicon industry) to provide many pairs of bar reduction furnace equipment and reduction pry blocks. Value the company's market leadership in energy-saving and water-saving equipment and new energy equipment.

Layout of new energy technology transformation, electrolytic cell business waiting for volume. The company's new energy equipment business development is diversified, in addition to reduction furnace equipment, the company complies with the development trend of green hydrogen industry, actively arranges electrolytic cells, and is expected to realize customer channel sharing and rapid delivery of electrolytic cell equipment by virtue of the market advantages of reduction furnaces. As of 2023H1, the workshop of the company's green electricity hydrogen production system has been put into operation. During the same period, the company's fully immersed liquid-cooled heat exchanger module (CDM) orders have been released, heat pipe products stable shipment. The performance of the new energy equipment sector is expected to grow.

Investment suggestion: on the basis of deeply ploughing the "energy-saving and water-saving" plate, the company has opened up a new track for the photovoltaic new energy industry, realized the "equipment + material" two-wheel drive business model, and is optimistic about the growth momentum of the company in the future.

The company is expected to achieve revenue of 24.913 billion yuan, 32.35 billion yuan and 39.719 billion yuan respectively from 2023 to 2025, and realize net profit of 1.939 billion yuan, 2.833 billion yuan and 3.509 billion yuan respectively, an increase of 102.6%, 46.1% and 23.9% over the same period last year. The corresponding EPS is 1.04,1.51 and 1.88 respectively, and the corresponding PE multiple of the current stock price is 9.7X, 6.7X and 5.4X respectively, maintaining the "overweight" rating.

Risk tips: capacity expansion is not as expected; industry competition is intensified; downstream demand is not as expected; raw material price fluctuation risk and so on.