Description of the event
The company released its three-quarter report for 2023, achieving revenue of 42.6 billion yuan in the first three quarters, an increase of 22% over the previous year; after excluding the equity impact of China Control Technology and the impact of the 22Q3 component divestment (382 million yuan), attributable net profit increased by about 8% year on year. Among them, 23Q3 revenue was 14.8 billion yuan, up 30% year on year; after excluding the equity impact of central control technology and the impact of 22Q3 component divestment (382 million yuan), attributable net profit increased about 9% year over year.
Incident comments
On the revenue side, even when revenue from the component manufacturing business was included in the same period last year, 2023Q1-3 revenue increased by more than 20%. Looking at each sector, low voltage electrical appliances are expected to grow steadily overall, with good performance in international exports and direct sales in the domestic industry; the photovoltaic business is growing rapidly. It is expected that household photovoltaics will be the main incremental contribution, and the company will continue to maintain its leading position in the industry.
As of the end of 2023Q3, the operating scale of the company's photovoltaic power plants was 14848.88MW, an increase of 34% over the previous year; among them, the operating scale of centralized, commercial and household photovoltaic power plants was 1825.90MW, 530.58MW, and 12492.40MW, respectively, up 90%, -53%, and 38% year-on-year.
On the profit side, 2023Q1-3 gross margin was 22.9%, down 0.4 pct year on year; Q3 gross margin was 24.0%, down 1.9 pct year on year, up 0.3 pct month on month. The company's gross margin showed an upward trend in a single quarter, which is expected to be mainly due to increased expansion of high-value industries, promotion of high-margin products, and strict control of product discounts. In terms of cost rate, the cost rate for the 2023Q1-3 period was 11.3%, down 1.5 pct year on year; the cost rate for the Q3 period was 12.1%, down 1.5 pct year on year, down 0.9 pct from month on month, with remarkable results in cost reduction and efficiency. In the end, net interest rates for 2023Q1-3 and Q3 were 7.0% and 7.4% respectively, down 2.2 pct and 5.8 pct from the previous year, mainly due to the divestment of the PV module manufacturing business in July last year, which increased net profit of 382 million yuan in Q3 last year.
In terms of other financial indicators, the company's 2023Q1-3 net operating cash flow inflow was about 1.6 billion yuan, compared with the same period last year, which changed from negative to positive; of these, the net inflow of Q3 operating cash flow was about 2.3 billion yuan. It is expected that the main focus is on successive repayments from early sales of photovoltaic power plants and extended payment periods to suppliers. At the end of 2023Q3, notes and accounts receivable were approximately $19.1 billion, up $700 million from the end of Q2; inventory was approximately $32.1 billion, up $2.7 billion from the end of Q2; and notes and accounts payable were about $201 billion, up $1 billion from the end of Q2.
The company has formed a two-wheel drive for household photovoltaics and low-voltage electrical appliances, which is supported by continuous rapid growth. The company's net profit attributable to shareholders of listed companies is estimated to be about 4 billion yuan in 2023, with a corresponding valuation of about 12.6 times. Maintain a “buy” rating.
Risk warning
1. The risk of a sharp increase in the price of raw materials;
2. The development of the household industry fell short of expectations.