Event: In the first three quarters of 2023, the company achieved operating income of 81,119 billion yuan, an increase of 39.38% over the previous year; net profit of 5.077 billion yuan, an increase of 111.34% over the previous year. 2023Q3 achieved operating income of 31,736 billion yuan in a single quarter, an increase of 41.25% over the previous year, and realized net profit of 1,537 billion yuan, an increase of 35.67% over the previous year.
Components, scaffolds, and distributed systems have gone hand in hand, and the energy storage business has grown significantly. During the reporting period, the company leveraged its global brand, channel advantages and distribution market advantages. The photovoltaic product business developed rapidly. Shipments of photovoltaic modules, brackets and distributed systems all increased significantly compared to the same period last year. At the same time, 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. The comprehensive gross profit margin of 2023Q3 company was 16.70%, an increase of 0.56pp over the previous month. Benefiting from the gradual release of production capacity for self-produced N-type silicon wafers, the comprehensive cost of the company's component products has been further reduced, and the profitability of the component business has increased. Benefiting from the discontinuation of its own batteries and the increase in yield, the comprehensive cost of the company's energy storage products continues to decline, and the profitability of the energy storage business has increased. The company confirmed investment income of 463 million yuan in joint ventures and joint ventures, mainly contributing to the participation in Tongwei silicon, silicon wafers, and battery projects. In addition, the company's collective credit impairment losses amounted to $145 million and asset impairment losses amounted to $944 million, including loss of $321 million in inventory depreciation and loss of $622 million in fixed asset impairment.
Improve the integrated production capacity layout and increase TopCon's advanced production capacity. The company has further improved its integrated production capacity layout upstream. It is estimated that by the end of 2023, the production capacity of silicon wafers, batteries, and modules can reach 50 GW, 75 GW, and 95 GW, respectively. In terms of silicon wafers, the first phase of the 20GW N-type crystallization project at the company's Qinghai base was put into operation in February 2023, and production has now been completed. In terms of batteries, the company's TopCon battery production capacity was 10GW at the end of last year. This year, the Huai'an Phase I 5GW project, the Huai'an Phase II 10GW project, and the Qinghai Xining 5GW project have been put into operation one after another. At the end of the year, the Huai'an Phase III 10GW project will also be put into operation. It is expected that by the end of 2023, the company's TopCon battery production capacity will reach 40GW. Aiming at the high-profit market in the US, the company has built 6.5 GW integrated production capacity in Southeast Asia and 5GW module production capacity in the US.
Photovoltaic+energy storage are developed collaboratively, and the integrated layout can be expected. The company has achieved significant growth in energy storage system delivery. At the same time, it has deepened strategic cooperation with many leading enterprises to jointly build a healthy and strong supply chain guarantee system, laying the foundation for accelerated expansion of the global market. With the gradual introduction of its own battery production capacity, Tianhe Energy Storage has built a full-stack energy storage solution covering energy storage cells, ten thousand cycle liquid cooling systems, and intelligent management systems, etc., forming a unique barrier to core competitiveness. The energy storage battery, DC battery compartment and AC/DC product portfolio is expected to reach 12 GWh of production capacity by the end of 2023, and 25 GWh by the end of the second quarter of 2024. The company's energy storage products cover cells, packs and battery silos, and can develop collaboratively with PV module sales. It is expected that the market position will be further enhanced.
Profit forecasts and investment advice. The company's upstream layout of N-type silicon rods and slices improves vertically integrated production capacity, and adds N-type TopCon technology. The collaborative development of photovoltaics and energy storage, and the integrated energy storage layout to build cost competitiveness are expected to become a new growth point for the company next year. It is estimated that the net profit of the company from 2023 to 2025 will be 6.77 billion yuan, 8.23 billion yuan, and 11.52 billion yuan respectively, corresponding to PE 9 times, 8 times, and 5 times, respectively. Maintain a “hold” rating.
Risk warning: New production capacity investment or failure to meet expectations; US and European trade policy risks; exchange rate fluctuation risk.