occurrences
On January 15, 2024, the company released its 2023 annual results report. It is estimated that in 2023, the company will achieve net profit of 190 million yuan to 215 million yuan, +64.21%-85.81% year-on-year; net profit deducted from non-mother of 173 million yuan to 198 million yuan, or +77.52-103.18% year-on-year.
On a quarterly basis, taking the median value of the performance forecast range, the company is expected to achieve net profit of 573,055 billion yuan in the single quarter of 2023, +168.19% year over year and -5.81% month on month; net profit without return to mother of 53.2493 million yuan, +216.25% year over year and -6.84% month on month. Overall, the company's 2023 results were in line with expectations.
We have established cooperative relationships with many major customers, and advanced production capacity continues to expand.
According to SMM PV Vision statistics, PV module production will begin to decline in November 2023. The production schedule for January 2024 is expected to drop to around 40 GW, which will have a certain impact on the company's Q4 junction box product shipments in Q23. In the long run, the main customers of the company's junction boxes are leading component manufacturers such as Longji Green Energy, Trina Solar Energy, and Jingao Technology. The top five customers account for about 75%-85%, and they officially cooperated with Tongwei last year, binding many leading customers to provide strong support for the company's 24-year shipping volume. In terms of production capacity, the company's production expansion project is underway, and advanced production capacity continues to expand. It is estimated that 45 million chip junction box production capacity will be built, and the total production capacity of junction boxes will exceed 150 million sets. The expansion of advanced production capacity is compounded by the acceleration of customer introduction, and the company's profitability is expected to continue to improve.
There are frequent advantages in overseas markets, and interconnected wiring may be released at an accelerated pace.
The company's connected wiring harness products are mainly used in overseas photovoltaic power plants. By reducing the use of labor and junction boxes, reducing cable laying, and optimizing power plant operating costs, as overseas trade resumes after the epidemic is over, compounded by factors such as rising expectations of US interest rate cuts and marginal improvements in Sino-US relations, it is expected that the company's connected wiring product revenue will continue to increase in the future, and due to its non-standard attributes, the gross margin is higher than that of junction boxes, it is expected to become a new growth point for the company's business.
Investment advice
The company is expected to achieve revenue of 18.24/28.55/ 38.32 billion in 23-25, net profit to mother of 2.10/3.50/476 million, and corresponding PE of 26x/16x/12x. The company is a leading junction box company. New product iterations and capacity expansion are expected to increase its market share, and the volume of the connected wiring harness business is expected to provide the company with new increases and maintain a “recommended” rating.
Risk warning
Fluctuating raw material prices, fluctuating downstream industry sentiment, trade policy changes, new capacity expansion is not as fast as expected, etc.