Core views

The company released its 2023 performance report: revenue of 1,424 million yuan, +6.4% year on year; net profit to mother 208 million yuan, -42.2% year on year; net profit after deduction of 166 million yuan, or -51.1% year on year. Looking at Q4 alone, revenue was 456 million yuan, +11.0% year over month, +46.8% month on month; net profit to mother was 28.02 million yuan, -74.0% year on year, -39.3% month on month; net profit after deduction of 10.39 million yuan, -89.5% year on month, -75.3% month on month. The company's Q4 performance fell short of expectations, mainly due to the company's year-end accrued equity payment expenses, credit and asset impairment losses. 23. Affected by inventory in the second half of the year, slight reverse shipping performance was average; we judge that inventory will gradually be eliminated, and the shipping side will improve in 2024.

occurrences

The company released its 2023 performance report: revenue of 1,424 million yuan, +6.4% year on year; net profit to mother of 208 million yuan, -42.2% year on year; net profit after deduction of 166 million yuan, or -51.1% year on year; weighted average ROE of 5.45%, -12.57pct year on year.

Looking at Q4 alone, revenue was 456 million yuan, +11.0% year over month, +46.8% month on month; net profit to mother was 28.02 million yuan, -74.0% year on year, -39.3% month on month; net profit after deduction of 10.39 million yuan, -89.5% year on month, -75.3% month on month.

Brief review

1. The company's Q4 performance fell short of expectations, mainly due to the company's year-end accrued equity payment expenses, credit and asset impairment losses.

2. Expense side: In 2023, the company implemented a restricted stock incentive plan, confirming the share payment fee of 58.07 million yuan. If the impact of share payment fees is excluded, the net profit attributable to the owner of the parent company should be 266 million yuan, a decrease of 28.20% over the previous year.

3. In terms of impairment: ① The company carried out impairment tests on accounts receivable, notes receivable, and other receivables and confirmed impairment losses. The amount of credit impairment losses accrued in 2023 was 12.19 million yuan; ② Weak market demand in 2023, demand for the company's products decreased, and the inventory removal cycle lengthened, leading to large inventory price reduction preparations. The total amount of inventory price reduction losses calculated in 2023 was 75.22 million yuan.

Profit forecasting and suggestions: The core variables of the company's profit forecast are changes in sales volume, price and gross margin of products in the main business. The microreverse industry has a low penetration rate in Europe, and domestic companies have a low market share in the US market. It is expected that the market will continue to grow rapidly in the future. The company's slight reverse shipment in 2023 was clearly suppressed by inventory problems. Looking forward to 2024-2025, after the European inventory problem is resolved, it will improve and gradually match terminal demand. At the same time, we assume that the unit price and gross margin are steadily declining. The company's 2023-2025 performance is estimated to be 2.1, 3.9 billion yuan, and 530 million yuan, with corresponding valuations of 46.4, 24.7, and 18.3X, respectively, giving a “gain” rating.

Risk analysis

1. The photovoltaic and energy storage industry is less prosperous than expected risk: The solar photovoltaic and energy storage industry is highly correlated with the macroeconomic situation and national industrial policy. If the economy or industrial policies of major markets change significantly in the future, and PV installations fall short of expectations, it will affect the development of the industry and the growth rate of the company's revenue and profit to a certain extent;

2. Risk that component costs will continue to rise: IGBT supply may continue to be tight, and the shortage of raw materials will drive up the cost of downstream inverters, thereby limiting the pace of inverter shipments.

3. Industry competition intensifies risks: The slight reverse development trend is good. Inverter leaders are entering the market one after another with channel advantages, the production capacity of existing enterprises continues to expand, industry competition intensifies, and the company's business performance may be affected.

4. Risk of RMB exchange rate fluctuation: Affected by the increase in foreign currency to RMB exchange rate, RMB exchange rate fluctuations in 2024 are highly uncertain and may affect the company's revenue and profitability.

5. Risk of inventory impairment: The company's inventory amount is high. As of the end of the third quarter of 2023, inventory was 1.68 billion yuan, and there is a risk of impairment.

6. Profit forecasting assumes the risk of not being established. The revenue growth rate of the main business is an important assumption for future profit forecasting and valuation models. If affected by the above factors, the company's revenue growth rate falls short of expectations, and there is a risk of decline in response to the company's future profit forecast and valuation model. Under the current forecast scenario, we expect the company's revenue from 2023 to 2025 to be 14.24 billion yuan, 24.04 billion yuan, and 3.125 billion yuan, respectively, with year-on-year growth rates of 6.40%, 68.82%, and 30.00%; net profit to mother is 2.08, 3.91, and 528 million yuan, respectively, with year-on-year growth rates of -42.20%, 87.64%, and 34.94%. If the company slightly reverses product shipments falling short of expectations, or if the unit price falls seriously, then the company's revenue and net profit to mother will also fall short of expectations.

If the company's revenue scale falls slightly below expectations for the next two years, and if the company's revenue volume falls 5% from the current scenario, net profit to mother will be 208 million yuan, 372 million yuan, and 502 million yuan, respectively.

If the company's revenue scale falls far short of expectations for the next three years, and if the company's revenue volume falls 10% from the current scenario, net profit to mother will be 208 million yuan, 354 million yuan, and 477 million yuan, respectively.

Under extreme circumstances, if the company's operating income falls 20% from the current scenario, net profit attributable to mother would be 208 million yuan, 317 million yuan, and 426 million yuan, respectively.