Utilization hours and electricity prices declined in the third quarter compared with the same period last year, while revenue and net profit declined. In the first three quarters of 2023, the company achieved revenue of 543 million yuan (+ 4.83%), net profit of 186 million yuan (+ 15.49%) and non-return net profit of 179 million yuan (+ 11.30%). Among them, the revenue in the third quarter was 212 million yuan (- 5.45%), the net profit was 77 million yuan (- 4.87%), and the non-return net profit was 75 million yuan (- 6.34%). The increase in the company's results in the first three quarters was due to the steady expansion of the size of the company's self-owned power stations and the growth of photovoltaic revenue and gross profit compared with the same period last year. The reasons for the decline in operating income and return net profit in the third quarter are as follows: first, due to the influence of rainy and typhoon weather, the equivalent hours of photovoltaic power generation decreased by 41 hours compared with the same period last year, and unit power generation decreased somewhat; second, the phenomenon of power shortage was alleviated compared with the previous year, and the profit and loss sharing of power transactions decreased accordingly, the price of photovoltaic electricity decreased, and the revenue of comprehensive electricity decreased by 0.02 yuan / KWh compared with the same period last year.

The issuance of convertible bonds has been promoted and the construction of distributed photovoltaic projects has been carried out steadily. On October 23, the company announced the public issuance of convertible bonds, which raised 880 million yuan for distributed photovoltaic power station construction projects and repaid bank loans, of which 616 million yuan was used for 55 distributed photovoltaic power station construction projects, with a total installed capacity of 166.26MW. With the convertible bonds raising funds in place, the company's capital strength will promote the development of distributed photovoltaic project resources in hand, and ensure the sustained and steady growth of the company's performance.

The construction of electric power spot market has been accelerated, and the company's charging pile + energy storage business has ushered in the development. On September 18, 2023, the National Development and Reform Commission and the National Energy Administration issued the basic rules of Electric Power spot Market (for trial implementation) to promote the construction of electric power spot market. Based on distributed customers, combined with the application scenarios of charging pile, energy storage, microgrid, virtual power plant and other technologies, the company distributes the charging pile business of electric vehicles, steadily promotes the industrial and commercial energy storage operation business, constructs the two-wheel drive energy storage business development pattern of "industrial and commercial energy storage operation + household energy storage product R & D and manufacturing", provides the integrated service of "power generation + charging + power storage", and deeply excavates the value of industrial and commercial resources. The accelerated construction of the spot market of electric power will bring new profit ways for the company's industrial and commercial energy storage and charging pile business, which will help to promote the development of the company's charging pile + energy storage business.

Risk tips: electricity consumption decline; electricity price decline; distributed photovoltaic projects are not as expected; industry policy changes.

Investment advice: lower the profit forecast. Due to the decline in the company's performance in the third quarter compared with the same period last year, the company's profit forecast is lowered. It is estimated that the net profit for 2023-2025 will be 2.38 billion yuan, 321 million yuan, respectively (the original forecast is 355 million yuan, respectively), and the year-on-year growth rate will be 24.0%, 35.2%, 20.4%, 0.48, 0.64, 0.77 respectively. The current share price corresponds to a PE of 25.3, 18.7 and 15.5x respectively. Give the company 22-24 times PE in 2024, corresponding to the target market value of 71-7.7 billion yuan, and the reasonable value of 14.13-15.42 yuan per share, which is 28% premium to the current stock price, and maintains the "buy" rating.