Description of the event
The company released its three-quarter report. In the first three quarters of 2023, it achieved revenue of 1,152 million yuan, +9.40% year-on-year; realized net profit of 340 million yuan, +0.93% year-on-year; and realized net profit of 328 million yuan, +2.31% year-on-year. Based on this calculation, 2023Q3 achieved revenue of 478 million yuan, +23.25% year-on-year; realized net profit of 165 million yuan, +37.23% year-on-year; and realized net profit after deducting 160 million yuan, +42.02% year-on-year.
Incident comments
Benefiting from the acceleration of acceptance of new technology equipment from BC and TopCon, revenue and performance in the third quarter accelerated. On the one hand, the company obtained a mass production order of nearly 40 GW from BC last year, and the 2022 BC order has already been delivered. As the BC process gradually matures and production capacity is implemented for leading downstream customers, the acceptance of BC equipment may accelerate after the second half of the year. On the other hand, at the end of last year, the company TopCon's SE boron doping orders were gradually implemented. Benefiting from the smooth verification of the mass production process of TopCon, the leading manufacturer this year, some SE doping orders may have begun to confirm revenue after the second half of the year. Currently, BC and TopCon have clearly used new technology equipment, and it is expected that orders will be accepted at an accelerated pace, promoting continued improvement in revenue and performance.
Net interest rates have improved markedly, and the increase in the share of new technology order acceptance is expected to drive continued improvement in profitability. Along with the acceptance of new technology orders and other higher Q3 earnings, the company's profitability improved. The gross margin of the 2023Q3 company reached 49.59%, +2.37 pct and +0.15 pct, respectively; the net profit margin increased significantly by 3.52pct and 9.83pct, respectively. The company's profitability is expected to increase further as BC's new technology orders subsequently benefit from higher gross margin and increased revenue share. The company is currently relatively full of new orders and ongoing orders. The inventory of the 2023Q3 company reached 1,671 billion, up 15.67% from the end of Q2; the contract debt reached 1,658 million, up 19.91% from the end of Q2. Moreover, judging from the order situation this year, orders for new technology equipment such as SE boron doping from BC and TopCon have dominated, guaranteeing subsequent performance release.
The layout of various technology routes highlights the company's technical strength and consolidates the company's long-term growth. 1) At present, the company has obtained the full share of BC battery laser slotting, a leading customer. In addition to BC equipment completed delivery and acceptance last year, the company continued to receive orders for BC equipment this year. There are both N-type processes and P-type processes. In June '23, the company once again announced that it won the bid of 665 million orders from BC customers. Currently, orders have been signed and are being delivered one after another, and delivery is expected to be completed early next year. The XBC cell process includes laser slotting and the application of laser graphic processes. The investment in single GW equipment has increased significantly compared to TopCon, and the plans of leading manufacturers to expand production are relatively clear, and subsequent orders are expected to increase significantly. 2) This year, TopCon's new SE boron-doped order reached 450GW+.
At the same time, LIF equipment was announced and superimposed with the existing TopCon process, improving efficiency gains of more than 0.2%. At present, there have been more than 100 GW of new orders, and the increase in orders is obvious. It is expected that LIF technology will accelerate penetration, and the company's market share is expected to remain at a high level. 3) Expansion from the battery chip end process to the module end and the consumer electronics industry. At the beginning of August this year, the company completed the delivery of mass production prototypes for laser string welding of components. After verification, it is also expected that large-scale orders will be placed. In addition, the company also has a technical layout such as laser transfer printing. The platformization capabilities of laser technology are highlighted, consolidating the elasticity of order growth.
Maintain a “buy” rating. Net profit of 4.8 million and 960 million yuan is expected to be realized from 2023-2025, corresponding to PE 37x and 19x, respectively.
Risk warning
1. The promotion of the company's new technology products fell short of expectations;
2. The company's acceptance of new technology orders fell short of expectations.