Core views

In 2023Q3, the company achieved revenue of 1,546 billion yuan, an increase of 89.44% over the previous year, net profit of 54 million yuan, an increase of 1.80% over the previous year. The increase in revenue exceeded expectations. The profit growth rate was significantly lower than the revenue growth rate due to declining gross margin and fluctuations in financial expenses. As of the end of 2023Q3, the company's contract liabilities were 3.479 billion yuan. Compared with the contract liabilities of 2,452 billion yuan at the end of 2023Q2 and 1,644 billion yuan at the end of 2022, the company's contract liabilities increased by 41.90% and 111.67% respectively. Judging from this, the company's new Q3 orders have maintained a rapid growth trend. The company is a leader in component assembly lines, actively expanding from automation equipment to process equipment, and from component equipment to battery equipment. In particular, it has a first-mover advantage in the field of perovskite equipment, and future growth can be expected.

occurrences

The company released its report for the third quarter of 2023. The first three quarters achieved operating income of 4.954 billion yuan, an increase of 59.40%; net profit of 298 million yuan, a year-on-year increase of 48.40%; Q3 achieved revenue of 1,546 billion yuan, an increase of 89.44%; and net profit of 54 million yuan, an increase of 1.80% over the previous year.

Brief review

Revenue rose higher than expected, and profit-side growth was under pressure

The photovoltaic industry has maintained a high level of prosperity, and the company has obtained a large number of orders due to the high quality of its products and services. With ongoing orders confirmed one after another, the company's revenue has increased dramatically. The company achieved revenue of 1,546 billion yuan in 2023Q3, an increase of 89.44% over the previous year. Revenue growth accelerated significantly from 48.70% in the first half of the year, exceeding our expectations.

The growth rate on the profit side is under pressure. 2023Q3 achieved a gross profit margin of 20.97%, a year-on-year decrease of 3.73 pct, mainly related to the current confirmed order structure, which is within a reasonable range overall. The total cost rate for the Q3 period was 17.93%, with a year-on-year increase of 2.31 pct. Among them, the sales, management, R&D, and financial expense rates were 4.34%, 4.87%, 7.67%, and 1.04%, respectively, and -1.28pct, -1.60pct, +1.13pct, and +4.06pct, respectively. The significant increase in financial expenses was mainly due to a decrease in net exchange earnings due to exchange rate changes. 2023Q3 achieved net profit of 54 million yuan, a year-on-year increase of 1.80%, corresponding to a net profit margin of 3.50%, a year-on-year decrease of 3.01 pct.

Orders for photovoltaic equipment are growing rapidly. The company's contract liabilities at the end of 2023Q3 can be expected to be 3.479 billion yuan in the future. Compared with the contract liabilities of 2,452 billion yuan at the end of 2023Q2 and 1,644 billion yuan at the end of 2022, the company's contract liabilities increased by 41.90% and 111.67% respectively. Judging from this, the company's new Q3 orders have maintained a rapid growth trend. It reflects the strong demand for module equipment against the backdrop of continued increase in terminal demand and continuous expansion of production by integrated manufacturers. The company's photovoltaic module assembly lines and laminators maintain a leading market position, and product competitiveness is highlighted.

The company is the first company in the industry to complete the development of perovskite equipment and has actual product sales. Currently, the company provides MW grade perovskite and overall solutions, and provides output and technical support for GW grade perovskite mass production equipment. At the same time, the company has rich technical reserves, and the product matrix is constantly being optimized and improved. The perovskite industry is at a critical point of development from MW grade production lines to GW grade production lines. Equipment plays an important role as the foundation of industrialization. The company's forward-looking layout in this field has a first-mover advantage, and is expected to achieve rapid growth in line with industry trends.

Investment suggestions: The company focuses on the “photovoltaic+packaging+lithium battery” equipment business. The photovoltaic module equipment benefits from the continuous rapid growth of downstream production orders. The battery equipment is actively deployed in the fields of TopCon, HJT, and perovskite. In particular, the perovskite sector is firmly committed to full-line equipment planning, and future growth can be expected. We expect the company's revenue for 2023-2025 to be 64.43, 77.63, and 8.971 billion yuan respectively; net profit for 2023-2025 was 4.51, 6.13, and 743 million yuan respectively, up 49.4%, 35.9%, and 21.2% year-on-year respectively, corresponding to PE 20.5, 15.1, and 12.5 times, maintaining the “buy” rating.

Risk warning: ① The risk that production in the downstream module industry falls short of expectations: Photovoltaic equipment is one of the company's core businesses. The company occupies a leading position in the module assembly line field. Product demand mainly comes from the expansion of the downstream module industry. If downstream prosperity declines and the module industry's production expansion falls short of expectations, it will have a certain adverse impact on the company's performance growth. ② Risk that the development progress of new businesses such as battery equipment is lower than expected: Photovoltaic cell equipment is the company's key business. The company has a layout in battery technology routes such as TopCon, HJT, and perovskite. New business development is not only limited by changes in external factors, but also places higher demands on internal R&D and management capabilities. If there are major changes in external factors or the company's technical development and comprehensive operation capabilities are insufficient, there is a risk that development falls short of expectations.