Matters:
The company released its 2023 performance report. The full year of 2023 achieved operating income of 2,026 million yuan, +31.86% year on year; net profit to mother of 520 million yuan, -2.37% year on year; net profit after deducting non-return to mother of 535 million yuan, +3.81% year on year; and net interest rate to mother 22.56%, -9.00pct year on year. Among them, 2023Q4 achieved operating income of 618 million yuan, +2.93% YoY, +80.13% month-on-month; net profit to mother of 104 million yuan, -38.69% YoY, +56.06% month-on-month; net profit after deducting non-return to mother of 154 million yuan, -7.00% YoY, +217.57% month-on-month; net interest rate of 16.91%, YoY -11.48pct, and -2.61 pct month-on-month.
Commentary:
The accelerated withdrawal of share payment fees will affect about 100 million yuan in 2023. Due to the termination of the 2022 restricted stock incentive plan in 2023, the share payment fees that have already been calculated will not be refunded, and the remaining share payment fees will be withdrawn at an accelerated pace in 2023. In 2022/2023, the corresponding equity incentive fee was RMB 0.11/108 million. Excluding the above effects, net profit returned to the mother was RMB 543/628 million, respectively, or +15.54% compared to the same period in 2023. If the incentive fee is taken into account, the company's net return interest rate in 2023 was 30.97%, -3.69pct year on year, and profitability is still at a high level.
The company's slight reverse shipments increased steadily, and revenue increased sharply in the fourth quarter compared to the previous quarter. The global photovoltaic industry is developing rapidly, and the company actively grasps market opportunities and promotes further growth in the company's performance by increasing market development efforts and diversifying product types. The company's slight reverse shipment is expected to rise steadily throughout 2023, achieving a year-on-year increase of 10%-20%; with the gradual elimination of inventory, the company achieved revenue of 618 million yuan in 2023Q4, an increase of more than 80% over the previous year, highlighting the company's operational resilience.
The energy storage business is gradually starting up, opening up room for growth. The company laid out the energy storage business early and developed in collaboration with the micro-inverse business. Related products mainly include energy storage inverters, energy storage systems, etc. At present, the company's energy storage inverters have completed grid certification in Germany, Poland, France, the United Kingdom, Australia, Austria, Pakistan and other countries, and shipments will begin in 2023. The company's large storage business is gradually starting up, and domestic projects have now won bids. In December 2023, the company announced that its subsidiary Qinghe Energy won the bid for China Electric Power Investment Group Co., Ltd. materials and equipment branch and Electric Energy Tesco (Beijing) Technology Co., Ltd. for the 2022 e-commerce procurement project for energy storage systems. Currently, the company's integrated energy storage system has an annual production capacity of 5 GWh, and the planned production capacity is 10 GWh in 2024. It is expected to become the company's second growth pole in the future.
The large buyback shows the company's confidence in development. In February 2024, the company announced that it plans to repurchase the company's shares through centralized bidding, with a repurchase amount of 1-2 billion yuan, and the repurchase price shall not exceed 350 yuan/share. It shows the company's confidence in future continuous development and recognition of the company's values, and helps promote the company's stable and healthy development.
Investment advice: The company is a micro-inverse leader. The energy storage business is gradually expanding, and the performance is expected to be steady, moderate and positive. Based on the quick performance report and considering the impact of inventory backlogs, we adjusted the profit forecast. The company's net profit to mother for 2023-2025 is estimated to be 5.20/8.62 billion yuan (previous value: 5.91/10.07/1,455 billion yuan), respectively, and the current market value corresponding to PE is 34/20/15 times, respectively. Referring to comparable company estimates, the 2024 25x PE was given, corresponding to a target price of 256 yuan, maintaining the “recommended” rating.
Risk warning: terminal demand falls short of expectations, capacity expansion progress falls short of expectations, increased market competition, etc.