Financial highlights: The company disclosed its 2023 annual results forecast and achieved net profit of 190 million yuan to 215 million yuan for the whole year, an increase of 64.21% to 85.81% over the previous year.
Junction box shipments are growing rapidly, and full-year results are in line with expectations. The 23-year results forecast a high increase in net revenue and profit, and full-year results are in line with expectations. The company's performance grew rapidly, mainly due to the rapid increase in PV junction box shipments in the main business. In 2023, the company continued to expand sales channels, and the diode junction box products newly expanded the major customer Tongwei Co., Ltd., which contributed to a large sales volume. The new chip junction box has obtained many domestic and international patents. Currently, sales customers include Tianhe Solar, Wuxi Suntech, South Korea's Hanwha, REC, etc., and the current shipment volume accounts for about 20% of all junction box products. At the same time, the company actively adopted various measures such as increasing the self-supply ratio of major materials and improving production efficiency to effectively control raw material costs and further improve profitability.
Looking ahead to 2024, the expansion of production capacity of leading companies will help increase shipments. In '23, the company's daily production scale was 300,000 units, or about 110 million units/year. With the completion and commissioning of the Jiangsu Dafeng project and the Vietnam project in the future, the company's production capacity will be further increased, compounded by the continuous expansion of new customers and the increase in the share of existing customer purchases, which will help the company's shipments grow throughout the year. At the same time, fluctuations in raw material prices are slowing down, superposition product upgrades and iterations are speeding up, and the share of sales of chip junction boxes with slightly higher gross profit margins has increased. The profitability of individual terminal box products is expected to remain stable. The company may maintain a gross margin level of around 20% in 24 years.
The capital was increased to acquire Jiangzhou Auto Parts and enter automotive interiors and interiors. On February 20, the company announced that it plans to use 80 million yuan to subscribe for the additional registered capital of Jiangsu Jiangzhou Auto Parts Co., Ltd. of 10.4082 million yuan. After the capital increase is completed, the company will hold 51% of Jiangzhou Auto Parts's shares. Jiangzhou Auto Parts is engaged in the production and sale of automotive interior and exterior parts, and has become a qualified supplier for leading automobile companies such as BYD. According to performance promises, Jiangzhou Auto Parts's net profit from 2024 to 2026 will not be less than 0.3/0.4 billion yuan. One of the main production processes for automotive interiors and exteriors is the injection molding process, which is highly compatible with the company's existing production technology for junction box products. It will ease the fluctuations in the growth cycle of the company's photovoltaic business and bring new business growth points to the company.
Company profit forecast and investment rating: We expect the company's net profit for 2023-2025 to be $1.98, 3.10, and $427 million, respectively, and corresponding EPS of 1.65, 2.59 and 3.56 yuan, respectively. The current stock price corresponds to 2023-2025 PE values of 27, 18, and 13 times, respectively. Maintain a “Recommended” rating.
Risk warning: trade barriers in the industry have increased; downstream demand falls short of expectations; competition for junction box products has intensified.