The company released its 2023 performance report, with a year-on-year increase of about 51% in profit. The company's TopCon component sales increased rapidly, and the energy storage business progressed steadily; maintaining a purchase rating.
Key points to support ratings
The company's profit for 2023 is expected to increase by about 51% year on year, in line with expectations: the company released the 2023 annual results report and achieved a profit of 5.561 billion yuan for the whole year, an increase of 51.12% year on year; after deducting non-profit of 5.779 billion yuan, an increase of 66.78% year on year. According to the company's performance report, 2024Q4 achieved profit of 484 million yuan, a year-on-year decrease of 62.10% and a decrease of 68.50% month-on-month; realized deduction of 660 million yuan for non-profit, a year-on-year decrease of 46.13%, and a decrease of 53.14% over the previous year. The company previously issued a performance forecast. The rapid results are within the forecast range and are in line with expectations.
Depreciation or phased impact on profit performance: In 2024, N-type demand volume, stock P-type production capacity may be affected by impairment. The company is expected to generate 75GW battery production capacity by the end of 2023. Among them, N-type Topcon production capacity will reach 40GW, and the production capacity of P-type batteries with a stock of 35 GW is at risk of depreciation. The company showed an increase in revenue and a downward trend in profit in Q4. In 23Q4, it achieved operating revenue of 32.4 billion yuan, an increase of about 2% month-on-month, and a significant month-on-month decline in profit. We believe that the main reason for the month-on-month decline in the company's Q4 performance may be due to impairment strategies.
Shipments in the company's various businesses increased rapidly: According to the company's disclosure, 2023Q1-Q3's component shipments were 45-46 GW, with a year-on-year increase of over 58%, of which Q3 shipped 18-19 GW; the 2023Q1-Q3 distributed systems business achieved shipments of nearly 7 GW, an increase of more than 65% over the previous year, of which Q3 shipments exceeded 2 GW.
According to the company's disclosure, benefiting from a significant increase in N-type production capacity, the company's share of TopCon component product sales increased significantly. In terms of energy storage, the company's energy storage battery, DC battery compartment and AC/DC product portfolio reached a production capacity of 12 GWh by the end of 2023, and is expected to reach 25 GWh by the end of the second quarter of 2024.
The company issued an action plan to promote “improving quality, increasing efficiency and increasing returns”: the company has continued to pay dividends for 4 consecutive years since its listing in 2020, and annual cash dividends account for 27.63%-32.28% of the net profit to mother in the consolidated statement. On May 29, 2023, the company disclosed that it plans to repurchase the company's shares through centralized bidding transactions using its own or self-raised capital of 300-600 million yuan. As of January 30, 2024, it had repurchased 1.02 million shares. The repurchase price covered 23.87-38.12 yuan/share, and the payment amount reached 410 million yuan. The company will establish a continuous, stable and scientific return mechanism to maintain the continuity and stability of the profit distribution policy.
valuations
Considering the continued decline in 2023Q4 PV module prices, we adjusted our 2023-2025 forecast earnings per share to 2.55/2.27/2.75 yuan (the original forecast earnings per share for 2023-2025 was 3.46/4.38/5.44 yuan), corresponding to a price-earnings ratio of 9.7/10.9/9.0 times; considering the company's leading PV module sales share increased and the energy storage business progressed steadily, maintaining the purchase rating.
The main risks faced by ratings
Policies fall short of expectations; raw material costs fall short of expectations; price competition exceeds expectations; risk of international trade friction; risk of technology iteration.