Description of the event
TCL Central released its 2023 three-quarter report. The first three quarters of 2023 achieved revenue of 48.654 billion yuan, a year-on-year decrease of 2.39%; net profit of 6.188 billion yuan, a year-on-year increase of 23.75%; of these, 2023Q3 achieved revenue of 13.756 billion yuan, a year-on-year decrease of 24.19%, a year-on-year decrease of 20.39%; and net profit of 1,652 billion yuan, a year-on-year decrease of 27.67%. In addition, the company plans to repurchase 5-10 billion yuan, and the repurchase price will not exceed RMB 34.15 per share.
Incident comments
Looking at the split in the third quarter, the company's production capacity continued to be released, and silicon chip shipments increased month-on-month. The profit trend was worse in July and September, and August was better. Overall, the single-watt net profit for the third quarter remained flat month-on-month; the component side (including silicon wafers) was in the low price range, and the component sector affected profits and contributed negatively overall; the overall contribution of other businesses was not significant, close to leveling off. Overall, the company's 2023Q3 gross margin was 22.88%, down 0.53pct month-on-month, and net profit margin was 12.01%, down 1.21pct month-on-month.
Other aspects, the company plans to repurchase 5-10 billion yuan, reflecting the management and controlling shareholders' affirmation of the company's internal value and firm confidence in the company's future development prospects. Q3 Foreign capital - The Abu Dhabi Investment Authority entered the company's top ten shareholders for the first time, holding 2.38 million shares, reflecting the company's recognition in terms of globalization. In terms of financial data, the company's expense rate for the 2023Q3 period was 7.22%, and the sales, management and finance expense rates were 0.92%, 1.9%, and 1.43% respectively. Expense control continued to be low.
Looking ahead, the core competitiveness of the photovoltaic industry returns to technological innovation and manufacturing method advantages, product trends are developing towards N-type high power and high efficiency, and Zhonghuan is committed to large-scale, N-type, and global strategies. G12 and N-type strategic products have scale advantages, technical advantages, cost advantages and market advantages. In terms of globalization, the first phase of the company's Saudi Arabia production capacity is 20 GW, and is expected to be put into operation by the end of 2024 or the beginning of 2025; its subsidiary Maxeon holds IBC battery and tile module patents, has production capacity in Southeast Asia and Mexico, and plans to build 3GW TopCon battery and module production capacity in the US in the near future. In terms of differentiation, the N-type advantage is obvious. The company's own battery and component sector layout continues to improve. The battery engineering demonstration line in Jiangsu has put into operation the differentiated TopCon production line to reduce costs and improve efficiency in desilvering (copper process).
We expect the company's corresponding net profit for 2023 and 2024 to be 7.7 billion yuan and 8 billion yuan respectively, and corresponding PE 9 times and 9 times, maintaining the “buy” rating.
Risk warning
1. The competitive pattern deteriorated;
2. PV installation falls short of expectations.