Core views
The company released its three-quarter report. Q3 achieved net profit of 45 million yuan per quarter, up 67.07% year on year and 21.68% month on month. Q3 The company's gross margin for the single quarter was 13.2%, an increase of 1.5 pct over the previous quarter. We judge that this was mainly due to the increase in the share of the company's SMBB welding tape products during the reporting period. The company's production capacity continues to expand, and the production process is leading. By the end of the third quarter, the company's welding belt production capacity was about 3,200 tons/month. The successor company has planned a production capacity of 20,000 tons/year in Anhui. Production is expected to be reached in the second half of 2024, and the company's production capacity is steadily expanding. The company has sufficient N-type welding tape technology reserves. It is expected that in the process of transformation of photovoltaic modules and batteries from P type to type N, the market share of welding tape will continue to increase.
occurrences
The company released a three-quarter report. From January to September 2023, the company's operating income was 2,046 billion yuan, up 41.92% year on year, net profit was 118 million yuan, up 55.71% year on year; 2023Q3, the company's revenue for the single quarter was 755 million yuan, up 60.06% year on year, up 2.39% month on month, net profit was 45 million yuan, up 67.07% year on year, up 21.68% month on month.
Brief review
The rapid increase in the share of SMBB welding tape led to a month-on-month increase in the gross margin of the company's welding tape products.
Q3 The company's gross margin for the single quarter was 13.2%, an increase of 1.5 pct over the previous quarter. We judge that this was mainly due to the increase in the share of the company's SMBB welding tape products during the reporting period. Q3 began rapid deployment of TopCon battery production capacity, corresponding to a year-on-year increase in demand for SMBB products. Since the wire diameter of SMBB welding tape decreased compared to traditional MBB welding tape and increased technical difficulty, the gross margin was slightly higher than that of MBB welding tape. As the share of SMBB welding tape increased, Q3 company's gross margin increased month-on-month.
Production capacity continues to expand, and production technology is leading. By the end of the third quarter, the company's welding belt production capacity was about 3,200 tons/month. The successor company has planned a production capacity of 20,000 tons/year in Anhui. Production is expected to be reached in the second half of 2024, and the company's production capacity is steadily expanding.
The company has sufficient N-type welding tape technology reserves. It is expected that in the process of transformation of photovoltaic modules and batteries from P type to type N, the market share of welding tape will continue to increase. Photovoltaic welding belts are a part of the photovoltaic industry with a scattered pattern. It is mainly due to the low barriers and many entrants in the welding belt industry in the early years, but as the trend of multi-main grid technology for components is determined, the trend of thin wire welding tape is obvious. Currently, the SMBB welding belt has reached 0.26mm, and the wire diameter of 0BB welding tape will decline further in the future. It is expected that in the process of future technology iteration, the company's market share will continue to increase as an industry leader with sufficient technical reserves.
Investment suggestion: The company is a leader in photovoltaic welding belts, with a complete range of products, high cost performance and strong competitiveness. It is expected that in the process of technological iteration of N-type products, the market share will continue to increase, gaining a higher growth rate than the industry. The company's 2023-2025 revenue is estimated to be 28.8, 39.3, and 4.74 billion yuan, and gross margins are 12.7%, 14.6%, and 16.8% respectively, of which welding tape revenue is 28.4 billion, 38.9 billion yuan, and 4.7 billion yuan, and gross margins are 11.6%, 13.8% and 16.2% respectively; the company's net profit for 2023-2025 is expected to be 1.7, 290, and 4.4 billion yuan respectively, with year-on-year growth rates of 69%, 69%, and 53%, respectively, and earnings per share of 1.6, 2.8 and 4.2 billion yuan, respectively. Yuan, PE corresponding to the closing market value of November 10, is 30.5, 18, and 11.8 times, respectively.
Risk warning: 1. The risk of increased competition in the industry. The welding belt chain is a relatively scattered link in the photovoltaic industry chain, and capital expenditure is low and production is expanding rapidly. If the company cannot improve its competitiveness through continuous development of new products, the company may face the risk of declining market share and falling gross margin; 2. There is a risk that raw material prices will fluctuate. The main raw materials for photovoltaic welding tape products are copper and tin, and the direct material station cost of the product is about 90%. Although the company continues to track market price information and cope with the impact of price changes through hedging and other tools, if there is a large divergence between short-term product prices and raw material prices, the company's gross margin may be affected; 3. Risk of bad debts on accounts receivable and bills. Since the company's raw materials, copper and tin, are commodities and require cash procurement, downstream component customers usually pay bills after a certain account period when purchasing welding tape, so the company's book accounts receivable and notes are large. If the company's customers' future financial situation or credit conditions deteriorate and repayments are not in place, the company's normal operations may be affected; 4. The share of SMBB and 0BB welding tape shipments does not increase as much as expected, and processing costs are falling too fast. Since the margin of SMBB and 0BB welding tape is higher than that of traditional MBB welding tape, Therefore, with SMBB and 0BB welding belts The share is increasing. It is expected that the gross margin of the company's welding tape products will increase year by year, but if SMBB and 0BB welding tape shipments do not account for as much as expected or if processing costs fall too fast, the increase in the company's overall gross margin may be affected.