3Q23 performance is higher than we expected.
The company released results: 1~3Q23 achieved revenue of 1.152 billion yuan, year-on-year + 9.4%, home net profit of 339 million yuan, year-on-year + 0.93%, deduction of non-net profit of 328 million yuan, year-on-year + 2.31%, performance higher than we expected. We believe that it is mainly due to the acceleration of revenue recognition of new technologies such as BC.
3Q23's performance is growing rapidly, and the increase in contract liabilities and inventory confirms that orders are full. 3Q23's single-quarter income is 478 million yuan, + 23.25% compared with the same period last year; net profit from home is 165 million yuan, + 37.23% compared with the same period last year; deducting 160 million yuan from non-net profit, + 42.02% from the same period last year. We judge that the revenue growth is mainly due to the acceleration of revenue recognition from new technologies such as BC. As of the end of 3Q23, the company's contract liabilities and inventory were 1.658 billion yuan, respectively, compared with the same period last year, which were + 128.69%, 94.72% and 15.67%, respectively, compared with the same period last year. This is mainly due to the increase in sales orders and the increase in goods issued and products being sold. According to the company announcement, as of August 17, 2023, the company has signed a new contract for TOPCon laser doping equipment this year, and we judge that it has exceeded 500GW by the end of Q3.
Excellent profitability, continue to increase investment in research and development. 3Q23's gross profit margin and net profit margin are 49.6% and 34.6% respectively, year-on-year + 2.38ppt/3.52ppt, month-on-month + 0.16ppt/9.83ppt, respectively, and the profitability is improving. We judge that the increase in gross profit margin is mainly due to the better competition pattern of new technology laser equipment, and the higher gross profit margin than PERC laser equipment. 3Q23 other income accounts for 8.5% of income, year-on-year + 4.97ppt, mainly due to government subsidies and other factors. The 3Q23 sales / management / finance / R & D expense rate is 3.2%, 4.0%, 2.4%, 13.6%, respectively, compared with the same period last year, which is mainly due to the increase in the depreciation of the company's self-built houses and the increase in R & D investment in new products and processes, as well as the increase in the salary of R & D personnel.
Trend of development
With multi-technological breakthroughs, TOPCon LIF and BC laser equipment are expected to become the main order increments. According to the company official account: 1) Laser induced Sintering (LIF): it can effectively improve the photoelectric conversion efficiency of TOPCon battery, the gain is more than 0.2%, the equipment mass production order and bid winning confirmation, the cumulative order as of 9 100GW 13 exceeded 100GW. 2) BC process: orders are being delivered one after another and are scheduled to be completed early next year. According to industry news, a number of photovoltaic head enterprises layout BC route, we believe that the path choice of downstream head enterprises is expected to promote the company's orders to continue to improve.
Profit forecast and valuation
The 24-year profit forecast of 2023peg remains unchanged at 460 million yuan / 650 million yuan, and the current stock price corresponds to 39.1x/27.8x Pmax E in 2023 / 24, respectively. Keep the target price unchanged at 71.31 yuan, and correspond to the target of 42x/30x for 2023 / 24, with a potential increase of 7.9%, and maintain an industry rating that outperforms.
Risk
The iteration of new technology is slower than expected; the entry of new entrants leads to the deterioration of the competition pattern.