Incidents:
On January 26, 2024, the company released the 2023 annual performance forecast. In 2023, the company expects to achieve net profit of 177-202 million yuan, an increase of 49.50%-70.61% over the same period of the previous year; it is expected to achieve net profit without deduction of 161-186 million yuan, an increase of 41.73%-63.74% over the same period of the previous year.
The rapid development of the photovoltaic industry has driven continuous growth in demand for auxiliary materials, and the company's performance has improved dramatically:
Benefiting from the rapid development of the photovoltaic industry in 2023, the market demand for photovoltaic auxiliary materials continues to grow. The company has been deeply involved in the photovoltaic auxiliary materials industry for many years. It has 30+ photovoltaic protection junction box products. It has significant advantages in global marketing and high brand positions. It continues to explore domestic and foreign markets, and has achieved a significant increase in product shipments and revenue scale. At the same time, the company closely followed customer needs and carried out product technology innovation to effectively promote cost reduction and efficiency, and its business performance increased significantly compared to the previous year. In 2023, the company expects to achieve net profit of 177-202 million yuan, an increase of 49.50%-70.61% over the same period of the previous year; it is expected to achieve net profit without deduction of 161-186 million yuan, an increase of 41.73%-63.74% over the same period of the previous year. Among them, the company is expected to achieve net profit of 0.30-0.55 billion yuan in the Q4 single quarter, -3.23% to +77.42% year-on-year.
The installed capacity of solar power generation increased 55.2% year-on-year in 2023, and the company is expected to continue to grow rapidly with product and customer advantages:
On January 26, the National Energy Administration released the national electricity industry statistics for 2023. By the end of December, the country's cumulative installed power generation capacity was about 2.92 billion kilowatts, an increase of 13.9% over the previous year. Among them, the installed capacity of solar power generation is about 610 million kilowatts, an increase of 55.2% over the previous year, and the industry continues to grow rapidly. The company's PV module protection junction box has a complete range of products, which are safe and durable, and have a rated current of up to 30A. They can be adapted to 182 mm and 210 mm high-power solar panels launched by photovoltaic module factories, and are at a more advanced level in the industry. After years of market development, the company has a certain popularity in the field of photovoltaic junction boxes and connectors, and has established long-term friendly cooperative relationships with companies such as Tianhe Solar, Jingao Solar, Youda Optoelectronics, Tongwei Co., Ltd., and HANSOL. It is expected that the company will continue to grow in line with the rapid development of the industry in the future.
New energy storage connectors are released, and PV junction box production capacity is expanding at an accelerated pace:
The company continues to expand the advantages of existing photovoltaic junction boxes. Construction of the Nantong plant began on October 24, 2023, with a total investment of 240 million yuan and a construction area of about 50,000 square meters, which will further expand the production capacity of photovoltaic auxiliary materials. At the same time, the company actively expands business in new fields, continues to develop iterative new products, and continuously create new revenue growth points. The company launched the QC-EL series energy storage connector on November 3, 2023. It has the advantages of double buttons, double locking, anti-falling, and strong waterproofing. It is expected to be widely used in industrial, power grid energy storage and solar power generation, etc., to enable more efficient solutions for energy transformation.
Investment advice:
The company is a leading high-end precision connection system enterprise in China. PV junction box production capacity is expanding at an accelerated pace, and it continues to expand new business and launch new products. We expect the company's revenue from 2023 to 2025 to be 1,448/2,803 billion yuan, net profit to mother of 1.93/2.83/373 million yuan, and corresponding EPS of 2.32/3.40/4.48 yuan, respectively.
We gave the company 17 times PE in 2024, corresponding to a 6-month target price of 57.80 yuan, maintaining a “buy-A” investment rating.
Risk warning: Market competition intensifies; product substitution; demand for photovoltaic auxiliary materials falls short of expectations; product development progress falls short of expectations.