Items:

The company released its three-quarter report in 2023, with operating income of 1.152 billion yuan in the first three quarters, an increase of 9.40% over the same period last year; net profit of 339 million yuan, up 0.93%; and net profit of 328 million yuan, an increase of 2.31% over the same period last year. In the third quarter, the company achieved revenue of 478 million yuan, an increase of 23.25% over the same period last year, a net profit of 165 million yuan, an increase of 37.23%, and a net profit of 160 million yuan, an increase of 42.02% over the same period last year.

Peace viewpoint:

Income structure and cost control have been continuously optimized, and the profitability of Q3 has been improved. In the third quarter of 2023, it is expected that the proportion of XBC, TOPCon and other N-type battery laser equipment in the company's revenue structure will gradually increase, and the company's revenue and profit growth will increase as the high-value equipment is accepted and recognized one after another. In the third quarter, the company achieved revenue of 478 million yuan, an increase of 23.25% over the same period last year, or an increase of 7.18% over the same period last year. In the same period, the company's cost control continued to be optimized, with a net profit of 165 million yuan in the third quarter, an increase of 37.23% over the same period last year, and an increase of 20.99% over the same period last year. In terms of profit margin, the company Q3 achieved a gross sales margin of 49.59%, an increase of 2.37 percentage points over 2022Q3, and a high level; net sales profit margin of 34.58%, an increase of 9.83% over Q2. It is expected that with the XBC battery laser film opening, TOPCon laser SE and LIF and other new generation equipment in the revenue further increase, the company's profitability is expected to continue to improve.

The BC route obtains the photovoltaic leader layout, and the new technologies of TOPCon SE and LIF continue to release volume. The company takes the lead in the market share of BC battery precision laser film opening equipment, Longji has clearly taken BC battery as the company's main technical route in the future, and announced in September that Tongchuan 12GW HPBC pro battery project is planned. Aixu is promoting Yiwu 15GW double-sided ABC battery module project, and BC enhanced double-sided power generation advantage is expected to expand centralized application scenarios. During the same period, Junda, Tianhe, Jingke and other head photovoltaic enterprises have layout and promote BC technology, the company's orders are expected to continue to expand. Since the beginning of this year, the expansion of TOPCon production has shown an explosive growth trend. As of the date of disclosure of the company's report, the company's TOPCon SE equipment has signed a contract of 450GW, which is expected to continue to expand in the second half of the year; the company's laser-induced sintering technology LIF can help improve battery efficiency by more than 0.2%. As of mid-September, the company's LIF equipment order capacity exceeded 100GW. In terms of components, the company is developing a new laser welding process, which can simplify the production process, reduce battery damage and improve welding quality.

With the continuous expansion of the company's newly signed and existing orders, the company's contract liabilities and inventory scale are growing rapidly. With the increase in customer advance payments, the company's contract debt at the end of the third quarter was 1.658 billion yuan, an increase of about 129 percent over the end of last year. With the increase in production and delivery of goods, the company's inventory at the end of the third quarter was 1.671 billion yuan, an increase of about 95% from the end of 2022.

We will continue to increase investment in research and development and actively expand into pan-semiconductor fields such as new displays and integrated circuits. The company attaches great importance to independent research and development. In the first three quarters of 2023, the company spent 161 million yuan on R & D, an increase of 73.86% over the same period last year, accounting for about 14% of revenue in the same period. The company has mastered a number of laser, laser processing technology, high-precision motion platform and core modules and other related core technologies. In the display panel industry, the company's laser repair, laser peeling and other processes have carried out research and development and prototype trial production; in the field of semiconductor wafer manufacturing and packaging, the company has carried out research and development of IGBT/SiC laser annealing, wafer laser cleaning / thinning and other related technologies.

Investment suggestion: taking into account the progress of the industrialization of N-type battery, the size of the company's order and the rhythm of revenue recognition, we adjust our profit forecast. It is estimated that the net profit of the company from 2023 to 2025 is 4.91,8.26,1.044 billion yuan (the original value is 5.18,7.77 and 967 million yuan), EPS is 1.80,3.03,3.82 yuan respectively, and the dynamic PE is 36.8,21.8 and 17.3 times. The company continues to promote new technology product development and verification, N-type battery laser equipment orders continue to expand, is expected to consolidate the leading position of photovoltaic laser, maintain the company's "recommended" rating.

Risk tips: (1) downstream installed demand may fall short of expectations due to the influence of supply chain prices and trade policies; (2) if the progress of cost reduction and efficiency improvement of N-type batteries slows down, or the layout of technical routes is unreasonable, terminal sales premium may fall short of expectations, expansion efforts or weakening; (3) the company's international procurement of optical components accounts for a large proportion, supply may be affected by logistics and trade policies. (4) the company is faced with the competitive pressure of new entrants from outside the industry, and the competition pattern may deteriorate.