Key points of investment
Report for the third quarter of 2023: performance increased by 36%; expect the photovoltaic HJT+Topcon battery business to accelerate 1) Performance: Revenue for the first three quarters of 2023 was 1.73 billion yuan, up 19% year on year; net profit was 75 million yuan, up 36% year on year. Revenue for the Q3 quarter alone was 580 million yuan, up 17% year on year; net profit was 225 million yuan, up 44% year on year. Confirmation of the performance of the beneficiary photovoltaic module equipment.
2) Profitability is steady: gross profit margin for the first three quarters was 29.6%, +1.1 pct year on year; net profit margin was 4.7%, +0.3 pct year on year. In the Q3 quarter alone, the gross profit margin was 31.1%, the same year on year; the net profit margin was 4.7%, +0.5 pct year on year.
3) High order growth: The company's contract debt reached 1.35 billion yuan at the end of the third quarter, an increase of 115.7% over the previous year. Inventory reached 2.63 billion yuan, up 117.5% year on year. Battery equipment: The company's TopCon PECVD equipment was tested at customers such as Jingao, Dongfang Risheng, and Etnar, etc., and orders were formed for some equipment. At the same time, the first mass-produced microcrystalline HJT PECVD equipment has been successfully delivered to downstream customers for pilot trial/mass production level verification. Component equipment: The company's new orders have reached a record high, overseas business has made great strides, and deployed the new HJT thinning and efficient component packaging technology.
4) R&D expenses: The first three quarters reached 153 million yuan, an increase of 47% over the previous year, accounting for 8.9% of revenue. HJT+TopCon+ perovskite equipment continued to increase, and R&D technology centers were established in Beijing, Suzhou, Yingkou and Qinhuangdao.
Accumulation and thin development: PV HJT+TopCon equipment is at the forefront, and the leading module equipment will take off for the second time 1) HJT equipment: The company's first mass-produced microcrystalline equipment has been delivered to leading domestic customers and is undergoing pilot trial/mass production level verification. The company's PECVD equipment has high production capacity and low cost, and equipment progress is expected to exceed expectations.
2) TopCon equipment: The company employs senior scientists from the Ningbo Institute of the Chinese Academy of Sciences as the company's chief scientist. It has the ability to deliver all tubular thermal process+vacuum equipment and processes, and has received batch orders for mass production.
3) It is proposed to issue a fixed increase of 1 billion dollars: of this, 480 million will be used for the company's intelligent manufacturing base project in East China, and 340 million will be used for the high-efficiency battery PVD equipment industrialization project. Together with the company's battery automation equipment, screen printing technology, and HJT PECVD equipment, the core equipment of the HJT entire line will be formed to reduce the production cost of the HJT entire line.
Profit forecast and valuation: Optimistic about the company's photovoltaic HJT and TopCon equipment are moving to the top. The company's net profit from 2023-2025 is expected to be 1.2/27/4.6 billion yuan, an increase of 91%/115%/72% over the previous year, and the corresponding PE is 44/21/12 times. Maintain a “buy” rating.
Risk warning: HJT/TopCon battery equipment is advancing at a pace that falls short of expectations; downstream production expansion falls short of expectations