The company achieved net profit of 61 million yuan in 2023Q3, +28% over the same period last year. In 2023Q3, the company achieved revenue of 440 million yuan, +21%, +15%; net profit of 61 million yuan, +28%, +29%; deducted non-net profit of 57 million yuan, +33%, +32%; gross sales margin of 23.9%, +5.2pcts, +2.0pcts; net sales margin of 13.8%, +0.8pcts, +1.5pcts.

The company achieved revenue of 1,152 billion yuan in the first three quarters of 2023, +17% year-on-year; net profit of 145 million yuan, +54% year-on-year.

Production capacity expansion is progressing steadily, and both sides of customer development and product innovation are working hard. As of H1 in 2023, the company has achieved a daily production capacity of 300,000 units. We expect the company to have an annual production capacity of over 100 million units by the end of the year. As the company's fund-raising projects progress smoothly, its new junction box production and technical improvement projects will be completed in March and June 2024, respectively. The company is expected to have an annual production capacity of more than 150 million sets by the end of 2024. The company's main customers are a number of leading component companies, and it continues to enter the new customer supply system and continue to expand sales channels. At the same time, the company actively invests in R&D, and the R&D cost rate is increasing year by year. The exclusive cast chip junction box can significantly increase current carrying capacity, has better heat dissipation performance and cost advantages, and is more suitable for high-power module products after the N-type iteration. With the introduction of chip junction box products into the market, the company's profitability is expected to further increase.

Actively deploy Vietnam's junction box production capacity, and connect wiring harnesses to boost high-end overseas markets. The company is steadily advancing the distribution of Vietnamese junction box production capacity. It has completed the registration procedures for Sun Company, a local investor in Vietnam, through a wholly owned subsidiary in Singapore. It will meet the needs of overseas markets by promoting the construction of Vietnamese production capacity. The company's interconnect wiring harness products are mainly used in foreign photovoltaic power plants. They are non-standard customized products. The gross margin is higher than that of the company's other products, reaching 28% in the first half of 2023. With the rapid increase in the installed scale of ground power plants in the European and American markets, the company's interconnect wiring products are expected to be released, further increasing the company's profit level.

Risk warning: risk of chip junction boxes and other new products falling short of expectations; risk of production capacity not meeting expectations; risk of increased industry competition; risk of companies falling short of expectations.

Investment advice: Lower the profit forecast and maintain the “increase in holdings” rating. Considering the recent sharp drop in component prices and the impact of profit-side pressure on upstream auxiliary materials prices, we lowered the company's profit forecast. Net profit for 2023-2025 is expected to be 2.15/3.23/430 million yuan (original forecast was 2.63/4.72/624 million yuan), +86/+50/ +33%, and EPS was 1.79/2.69/3.58 yuan (original forecast was 2.19/3.93/4.5.20 yuan), corresponding to the current dynamic PE, was 22/16/13 times, maintained “Excess holdings” rating.