Incident: The company's net profit for 23 years was 42-4.8 billion yuan, down 29.60% to 38.40%; deducted non-net profit of 31.0-3.60 billion yuan, with a decrease of 44.47% to 52.18%, of which Q4 lost 13.88-1,988 billion yuan, a decrease of 176.35% to 209.35%, a decrease of 184.04% to 220.37%, and a median loss of 1,688 billion yuan; a decrease of 213.89% ~ At 247.22%, the performance fell short of market expectations.

Silicon wafers continue to grow, putting pressure on overall profits. The company shipped 110GW+ silicon wafers in '23, up 64%; Q4 shipments were 28-30GW, up 65% /down 13%. As Q4 competition intensified +P sales, silicon wafer profits declined month by month. Q4 was basically break-even, with profit per watt falling 5-6 points; component shipments continued to lose 3-3.5 GW as a whole. Affected by the rapid decline in prices, the company accrued impairment losses of about 800 to 10 billion yuan; while processing the shares of polysilicon participating companies, investment income losses amounted to 6-8 billion yuan, putting pressure on Q4 results. Looking at 24 years, the operating rate differentiation in the silicon wafer process has increased, and the share of +N type has continued to increase. The company expects to ship 150GW+ and maintain its leading position.

Comprehensive layout of production capacity to strengthen global development. At the end of '23, the silicon wafer production capacity was 180 GW, and in '24 it will be raised to 196 GW through technical reforms. In terms of battery modules, Jiangsu has put into operation a differentiated TopCon production line to reduce silvering costs; module production capacity will reach 30GW by the end of '23, and Guangzhou's 25GW TopCon battery is expected to be put into production in 24, strengthening the overall layout! At the same time, it is planned to build crystal chip production capacity in Saudi Arabia, with 20 GW of design in the first phase; the participating company Maxeon has patents for IBC batteries and laminated modules, has production capacity in Southeast Asia and Mexico, and plans to build 3GW TopCon battery module production capacity in the US; the global layout is further deepened.

Profit forecast and investment rating: Based on competition intensifying the decline in silicon wafer profits, we lowered our profit forecast. We expect net profit to return to mother of 45/31/45 billion yuan in 2023-2025 (value of 80/95/111 billion yuan before 2023-2025), -34%/-32%/46% year-on-year. Consider the company's leading silicon wafer position and maintain a “buy” rating.

Risk warning: Increased competition and fluctuating raw material prices.