The company released the third quarterly report of 2023. In the first three quarters of 2023, the company realized operating income of 540 million yuan, with a year-on-year increase of 4.83%; the net profit attributable to shareholders of listed companies was 186 million yuan, with a year-on-year increase of 15.49%.
The decline in utilization hours caused by weather and the drop in electricity prices caused by loose power supply and demand relations have had a certain impact on the growth rate of performance.
Comments:
Weather factors and power supply and demand led to relative pressure on performance. 1) Affected by rainy and typhoon weather, the equivalent hours of photovoltaic power generation decreased by 41 hours in the third quarter compared with the same period of last year, and the unit power generation decreased. 2) At the same time, the electricity revenue in the third quarter decreased by 2 points/kWh compared with the same period of last year, mainly due to the easing of electricity shortage compared with the previous year, the corresponding decrease in profit and loss allocation of electricity trading, and the decrease in PV electricity price.
Convertible bonds have been approved by China Securities Regulatory Commission to provide fund support for the expansion of installed capacity of the Company. The Company issued an announcement on September 22,2023, and received the Reply on Approving the Registration of Convertible Corporate Bonds Issued by Zhejiang Xinneng Photovoltaic Technology Co., Ltd. to Unspecified Objects issued by CSRC. The CSRC approved the registration application of convertible corporate bonds of the Company, and the issuance process of convertible bonds of the Company was steadily advanced. The total amount of convertible corporate bonds to be issued this time shall not exceed RMB 880 million yuan, and the funds raised from this issuance will be used for distributed photovoltaic power station construction projects (estimated to be RMB 616 million) and repayment of bank loans. The issuance of convertible bonds will further improve the installed capacity expansion rhythm of the company, and the industrial and commercial distributed photovoltaic installed capacity is expected to reach a new level.
The distributed photovoltaic project reserves are sufficient, and the short-term conversion of bonds promotes the increase of installed capacity. Meanwhile, the company focuses on the layout of industrial and commercial energy storage projects, which is expected to become the second growth curve in the future. Sufficient project reserves and funds provided by convertible bonds will support the growth space of subsequent photovoltaic business. At the same time, the consumption pressure caused by large-scale grid-connection of wind and scenery may continue to increase. The industrial and commercial energy storage projects with key layout of the Company are expected to relieve the pressure of electricity consumption cost for industry and commerce under this background, and the industrial and commercial energy storage business may become the second growth curve for the subsequent development of the Company.
Investment advice: The decline in utilization hours caused by weather and the drop in electricity prices caused by loose power supply and demand relations have had a certain impact on the growth rate of performance. Based on this, we have lowered the profit forecast for the company from 2023 to 2025, and it is estimated that the net profit attributable to the parent company will be RMB 2.30/3.13/3.94 million Yuan from 2023 to 2025.(The pre-forecast value is 2.62/3.43/4.28 million yuan), corresponding to a growth rate of +20.2%/36.1%/25.6%. Based on the valuation of comparable companies, 34x PE will be given in 2023, corresponding to a market value of 7.85 billion yuan in 2023, and the target price will be lowered to 15.7 yuan, with 32% room for improvement compared with the current level, maintaining the "strong push" rating.
Risk hint: electricity price downside risk; project production is not as expected; electricity demand is not as expected.