The company's performance grew rapidly, and its profitability improved markedly
In 2023Q1-Q3, the company achieved operating income of 2,046 billion yuan, an increase of 41.92% over the previous year; net profit of 118 million yuan, an increase of 55.71%; and a gross profit margin of 12.61%, a net profit margin of 5.75%. The company's sales scale continued to expand in the first three quarters of 2023, and its performance achieved rapid growth. In 2023Q3, the company achieved operating income of 755 million yuan, up 60.06% year on year, up 2.39% month on month; net profit of 45 million yuan, up 67.07% year on year, up 21.68% month on month; achieved gross profit margin of 13.16%, up 1.46pct month on month, net profit margin 5.93%, up 0.94pct month on month. The operating scale of 2023Q3 company was further expanded month-on-month, and the significant increase in profitability drove rapid growth on the profit side.
Continuously increase R&D to build product competitiveness, and build new production capacity to advance 2023Q1-Q3 in an orderly manner. The company continues to increase investment in R&D expenses and achieve R&D expenses of 67 million yuan, an increase of 48.95% over the previous year. The company currently has a number of industry-first core patented technologies and advanced production lines. The technical level of photovoltaic tinned welding tape is leading in the industry. Currently, facing several mainstream batteries in the photovoltaic industry market, the company is also developing welding tape products suitable for the production of components of different technology types. As of 2023H1, the company has production capacity under construction; 1) convertible bond fund-raising projects: the 20,000 ton photovoltaic welding belt production base under construction continues to advance; 2) initial public offering projects: 13,500 tons of photovoltaic welding tape construction projects. According to the company's forecast, the company's overall production capacity is expected to reach 34,500 tons, 39,500 tons, 44,500 tons and 49,500 tons in 2024-2027. The expansion of production capacity continues to advance, and the market share will further increase. The company will continue to take advantage of MBB welding tape technology, and volume and price are expected to rise sharply.
The commodity futures hedging business stabilizes fluctuations in raw material prices, and the issuance of convertible bonds drives the expansion of business scale. According to the company's announcement, the company launched the commodity futures hedging business with the aim of reducing the impact of fluctuations in raw material market prices on the company's production and operation costs and making full use of the futures preservation function. The security deposit amount for the company to carry out product hedging business is not more than 30 million yuan, which is used on a rolling basis during the period of use. Carrying out value preservation for futures products reduces the impact of price fluctuations in the raw material market on production and operation costs, enhances one's overall ability to withstand risks, and enhances the possibility of stable financial growth. At the same time, the company's convertible bonds were officially listed on October 18. The smooth issuance of convertible bonds helped the company raise capital to expand production, and the scale of operations was further expanded.
Profit forecasting and valuation
Lower the profit forecast and maintain the “increase in holdings” rating. The company is a leading photovoltaic welding belt company. It continues to increase research and development to ensure product competitiveness and carry out hedging business to stabilize raw material costs. Considering the continuous decline in the price of downstream module products, the profitability and account recovery or short-term pressure of photovoltaic welding tape as the core material of the module, we lowered the company's profit forecast. The estimated net profit of the company in 2023-2025 was 1.81, 2.48, and 349 million yuan respectively (2.42, 3.56, and 470 million yuan respectively before the downgrade), corresponding to EPS of 1.74, 2.38, and 3.36 yuan/share, PE was 26, 19, and 14 times, maintaining the “increase in holdings” rating.
Risk warning: Demand for components falls short of expectations; worsening competitive landscape; fluctuations in raw material prices; risk of recovery of receivables.