Matters:
The company released its three-quarter report for 2023. 2023Q1-3 achieved operating income of 81,119 billion yuan, +39.38% year-on-year; net profit of 5.077 billion yuan, +111.34%; net profit after deduction of 5.120 billion yuan, +128.49% year-on-year; and a comprehensive gross profit margin of 16.83%, +3.38pct year-on-year. 2023Q3 achieved operating income of 31,736 billion yuan, +41.25%, +13.08%; net profit of 1,537 billion yuan, +35.67%, -13.27%; net profit after deducting non-return net profit of 1,408 billion yuan, +29.14%, -28.99% month-on-month; and a comprehensive gross profit ratio of 16.70%, +3.43pct year-on-month, +0.56 pct month-on-month. The performance was within the previous forecast range.
Commentary:
Shipments of components continued to rise, and the distributed business remained booming. The company leverages its global brand, channel advantages, and distribution market advantages. Shipments of photovoltaic modules, brackets and distributed systems all increased significantly compared to the same period last year. The company expects 2023Q1-3 components to be shipped about 45-47GW, of which 2023Q3 will ship 18-19GW, with confirmed sales of about 15-17GW; 2023Q1-3 distributed shipments of 6-7 GW, of which 2023Q3 will ship about 2 GW; and the 2023Q1-3 bracket will ship 5-6 GW, of which 2023Q3 will ship 2.0-2.5 GW. As prices in the industrial chain hit bottom and stabilized, shipments from leading component companies are expected to continue to increase. The company's component shipments are expected to be 65-70 GW throughout 2023, an increase of about 57% over the previous year.
The share of N-type silicon chips has increased, and the company's comprehensive costs are expected to drop further. The company continues to promote the construction of advanced N-type integrated production capacity. The sales share of TopCon component products and the proportion of silicon wafers self-supplied will be further increased, enhancing the profitability of the company's component products. It is estimated that by the end of 2023, the production capacity of silicon wafers, batteries, and modules will reach 50/75/95GW, respectively, of which the production capacity of N-type i-TopCon batteries will reach 40GW.
At that time, the company's N-type production capacity will increase to 53% of the total battery production capacity, and the silicon wafer production capacity self-supply ratio (silicon wafer production capacity/module production capacity) will increase to 53%.
Accelerate the layout of energy storage and the collaborative development of optical storage. The company further diversified its energy storage product line and continued to expand domestic and overseas markets. Shipments of energy storage products increased significantly compared to the same period last year; benefiting from the discontinuation of its own batteries and increased yield, the comprehensive cost of the company's energy storage products continued to decline. It is estimated that by the end of 2023, the production capacity of energy storage batteries, DC battery cells and AC/DC product combinations will reach 12 GWh, and is expected to further increase to 25 GWh by the end of the second quarter of 2024.
Investment suggestions: The company's component shipments have increased rapidly, vertically deepened integrated layout, and collaborative development of multiple businesses. Considering the sharp decline in industrial chain prices, we have adjusted our profit forecast. It is estimated that the company's net profit from 2023-2025 will be 70.9/82.3/116.5 (previous value 75.6/96.6/11.65 billion yuan), and the current market value corresponding to PE is 9/8/5 times, respectively. Considering the decline in the valuation center of the industry, referring to the valuations of comparable companies, 10xPE was given for 2024, corresponding to the target price of 37.86 yuan, maintaining the “strong push” rating.
Risk warning: The supply of raw materials is tight, capacity expansion is falling short of expectations, market competition is intensifying, etc.