Matters:
The company released its 2023 performance forecast. In 2023, the company achieved revenue of 710 to 76 billion yuan, +76% ~ +89%; net profit to mother of 93 to 10.3 billion yuan, +159% ~ +187% year over year; net profit after deducting non-return to mother of 91.5 to 10.15 billion yuan, +170% ~ +200% year over year; based on median calculation, net income to mother was 13.1%, +4.2pct year on year. Among them, 2023Q4 achieved revenue of 246 to 29.6 billion yuan, +36% to +64%, and +38% to +66%; net profit to mother of 20.8 to 3.08 billion yuan, +36~ +101% year over year, and -28% ~ +7% month-on-month; net profit without return to mother 20.7 billion yuan, +40% to +107%, month-on-month; based on median calculation, net profit margin was 9.5%, +1.0pct year-on-year, and -6.6pct month-on-month. The results slightly exceeded market expectations.
Commentary:
Inverter shipments increased in 2023, benefiting from the boom in terrestrial power plants. The company is expected to ship 120~140GW of inverters in 2023, of which 23Q4 will ship about 40~55GW. The high increase in the company's shipments mainly benefited from the continued high demand for ground power plants and industry and commerce at home and abroad; on the domestic side, the first batch of large base projects were connected to the grid and prices fell, and demand for ground power plants was strong; on the overseas side, the company's globalization deepened its layout efficiency. According to data from the General Administration of Customs, the export value of inverters in Anhui Province more than doubled year-on-year in 2023. Shipments in the first quarter are expected to remain at a high level as overseas channels approach the end of warehousing.
The company continues to expand its key large storage markets, and breakthroughs have been achieved in energy storage shipments. Thanks to continued growth in key energy storage markets such as the US, Europe and China, the company's energy storage business shipments grew rapidly in 2023. The company continues to make efforts to support the “three integrated technologies” of power electronics, electrochemistry, and power grids, leading the way in technological innovation in the field of energy storage. According to CNESA, in 2022, the company's global shipments of energy storage systems and energy storage PCS steadily ranked first among domestic companies. Demand for energy storage at home and abroad is strong, and the company's energy storage business is expected to continue to grow rapidly.
The US optical storage market may improve in 2024, and the company is expected to continue to benefit. Considering expectations of interest rate cuts and the bottoming out of the prices of photovoltaic modules and lithium carbonate, demand in the US optical storage market is more elastic in 2024, and may usher in a sharp increase. At the same time, the US is one of the most profitable overseas optical storage markets. The company accounts for a relatively high share of US reserves and is expected to continue to benefit.
Investment advice: The company's optical storage business continues to grow rapidly and is expected to maintain high profitability in 24 years, benefiting from improved demand in the US market. Referring to the company's performance forecast, considering that future industry competition will increase profitability or decline slightly, we adjusted the profit forecast. The company's net profit for 2023-2025 is estimated to be 98.24/101.52/12.66 billion yuan (previous value 99.94/116.16/13.638 billion yuan), respectively, and the PE corresponding to the current market value is 14/13/11 times, respectively. Referring to comparable company valuations, considering that the company's profitability is strong, 17x PE was given in 2024, corresponding to a target price of 116.21 yuan, maintaining a “strong push” rating.
Risk warning: demand falls short of expectations, tight supply of raw materials, increased competition in the industry, etc.