In 2023, the company achieved net profit of 3.79 billion yuan to mother, +11% year-on-year. In 2023, the company achieved revenue of 24.13 billion yuan, +32% year-on-year; net profit to mother was 3.79 billion yuan, +11% year-on-year. Corresponding to 2023H2, the company achieved revenue of 12.94 billion yuan, +29% YoY, +16% month-on-month; realized net profit to mother of 25.01 billion yuan, +41% YoY and +96% month-on-month. By business, in 2023, photovoltaic glass achieved operating income of 21.33 billion yuan, +32% year on year; gross profit margin of 21%, year over year - 3 pcts year on year; PV power plant operation achieved operating income of 2.69 billion yuan, +8% year on year; and gross profit margin of 69%, year on year.
The expansion of photovoltaic glass production is progressing steadily, and the company's share is expected to increase. In 2023, the company added 6 new photovoltaic glass production lines with a daily melting capacity of 1,000 tons. By the end of 2023, the company's photovoltaic glass melting capacity reached 25,800 tons per day.
We estimate that in 2023, the company's sales of photovoltaic glass were 1.13 billion square meters, an increase of 50% over the previous year; the sales price without tax was 18.8 yuan/square meter, the gross profit of a single flat was 4.2 yuan/square meter, and the net profit of a single flat was 2.5 yuan/square meter. Currently, the gross margin of photovoltaic glass is low, investment entry and exit thresholds are high, industry capacity supervision is being strengthened, and mid-tail companies are facing losses. It is expected that industry concentration will increase in the future; module competition is intensifying, module prices continue to decline, photovoltaic glass prices are steady or slowly declining, and profit margins are being squeezed. We expect the company's PV glass sales in 2024-2026 to be 1.50 billion square meters, 1.95 billion square meters, and the average sales price without tax is 18.2 yuan/square, 17.9 yuan/square meter, 17.6 yuan/square meter, with a gross profit margin of 17%/17%/17%. We expect the photovoltaic glass business to achieve revenue of 274/350/42.2 billion yuan in 2024-2026, an increase of 28%/28%/21% over the previous year.
The price of modules has dropped drastically, and the construction of photovoltaic power plants has accelerated. The decline in silicon prices accelerated into the bottom range, module prices dropped sharply, the return on investment in photovoltaic power plants improved markedly, and the company's power plant construction accelerated. In 2023, the company added 1.07 GW of installed capacity, and by the end of 2023, the cumulative installed capacity reached 5.94 GW (including 5.54 GW centralized and 0.4 GW distributed). We expect that in 2024-2026, the company will add 0.8 GW, 0.9 GW, and 1.0 GW of PV installed capacity, respectively, and the cumulative installed capacity of PV will reach 6.7 GW, 7.6 GW, and 8.6 GW by the end of 2024-2026.
In 2024-2026, the photovoltaic power generation business achieved revenue of 31/3.4/3.7 billion yuan, an increase of 16%/9%/8% year-on-year.
Risk warning: the risk of photovoltaic glass production and sales falling short of expectations; the risk of increased competition in the industry; the risk that the company's cost reduction falls short of expectations.
Investment advice: Considering the sharp decline in the price of photovoltaic glass since November 2023, the price of a single sheet of 2.0mm photovoltaic glass fell by 3 yuan to the current 16.3 yuan, and the price of a single sheet of 3.2mm photovoltaic glass fell 1.5 yuan from 27.3 yuan to the current 25.8 yuan. Based on prudential principles, the company's profit forecast for 2024-2025 was lowered, we expect the company's net profit to be 43.8/51.2 billion yuan (original forecast for 2024-2025) 66.5/8.04 billion yuan), with a year-on-year growth rate of 15%/17% (2024-2025 original forecast 60%/20%), diluted EPS was 0.49/0.57/0.67 yuan, corresponding to the 2024-2026 dynamic PE of 7/6/5 times, maintaining the “gain” rating.