Description of the event

The company released its 2023 performance report. It is expected to achieve revenue of 113.5 billion yuan in 2023, an increase of 33% over the previous year, and net profit to mother of 5.56 billion yuan, an increase of 51% over the previous year. The performance is at the center of the previous performance forecast.

Incident comments

In the component business, we expect the company's Q4 component shipments to increase slightly month-on-month, and the confirmed sales scale will also increase slightly month-on-month. Mainly, industry demand improved in the fourth quarter, and the company's orders increased. Among them, US Q4 shipments are expected to be stable month-on-month; TopCon shipments have maintained good month-on-month growth; and the self-supply ratio of silicon wafers is expected to increase further month-on-month. In terms of profit level, net profit per watt in Q4 is expected to decline month-on-month. Mainly, prices in the industrial chain continued to decline in Q4, and the overall profit level of the PV manufacturing side narrowed.

For distributed businesses, we expect the Q4 revenue scale to be relatively stable or slightly lower month-on-month, and the net profit per watt will remain at a good level.

The scaffolding business, Q4 benefits from the peak installation season for terrestrial power plants. Shipments are expected to increase significantly month-on-month, and gross margin remains good, forming a certain profit contribution. Energy storage shipments have continued to grow throughout the year, but the profit level is expected to be limited by scale, and there is some pressure.

Furthermore, based on the principle of prudence, the company anticipates that Q4 may cause some impairment, affecting the release of profit on the reporting side.

Looking ahead, the company's new technology production capacity will gradually be implemented according to the original plan, and TopCon battery production capacity is expected to reach about 40 GW by the end of 2023. We expect the company's component shipments to maintain a good level in the industry in 2024Q1. In particular, the company's component production schedule for March is expected to improve significantly compared to February. Looking at the full year of 2024, the company's component shipments are expected to increase rapidly, and its leading position is stable. Among them, shipments to the US market are expected to increase significantly, supporting the company's overall profit level. After 2023Q4 depreciates a lot, the company is expected to go light in 2024, maintain good and stable operation, and develop businesses such as scaffolding, energy storage, and power plants.

We expect the company to achieve a profit of 5.8 billion in 2024, which is 9 times the corresponding PE. Maintain a buy rating.

Risk warning

1. Deterioration of the competitive landscape;

2. PV installation falls short of expectations.