The global leader in tracking brackets has bottomed out and rebounded. The company was founded in 2009, entered the photovoltaic bracket industry in 2012, and was listed on the Science and Technology Innovation Board in 2020. Its main products cover photovoltaic stents and BIPVs. In 2021, due to delays in demand for terrestrial power plants due to supply chain imbalances, compounded the high cost of steel, chips, and shipping costs and a high increase in expenses during the period, the company's performance bottomed out at $15 million, or -94.7% year on year. Subsequently, as demand picked up and raw material prices fell, the company's profits gradually recovered. In particular, by 2023, the volume of ground-based power plants was concentrated, and the pace of delivery of tracking brackets was accelerated. According to the 2023 performance report, the company achieved revenue of 6.43 billion yuan, +73.8% year-on-year, and net profit of 350 million yuan, or +696.3% year-on-year.
Tracking bracket industry: (1) Demand logic; the gradual decline in initial costs+power generation gains further brought economic efficiency, and the global penetration rate gradually increased. According to estimates, the market space will reach 128.6 billion yuan by 2026, and the CAGR from 2022 to 2026 is 32.5%. (2) Pattern logic: Industry concentration is high, CR 572% and CR 1089% in 2022, which fully benefits the leaders in the context of high demand growth.
Support business: Combining offense and defense+open source savings, optimistic about performance growth.
1. Open source logic lies in the global vision layout:
(1) Focus on the Middle East and Indian markets: PV emerging markets, which are expected to have a high installed growth rate. Currently, the company's market share is the absolute leader, and it enjoys dividends under the volume trend. Supply chain localization (3 GW of overseas production capacity has been built; 6 GW planned) +global network layout increases market share. According to incomplete statistics, overseas tracking bracket orders have reached 10.9 GW since '22, of which the Indian and Middle Eastern markets account for 40%/34% (4.3/3.7 GW, respectively).
(2) The domestic penetration rate is 10% +, which is far below average, and there is plenty of room for development: with the gradual resolution of price, reliability, and consumption issues, the construction of superimposed new energy bases is expected to accelerate penetration. The company plans to build 3GW tracking production capacity in northwest China to support PV installation demand nearby.
(3) Try to break through in mature high-price markets: The penetration rate of tracking systems in the US market is as high as 94%, making it the largest terminal market for tracking systems (46% of the world in 2022). Domestic companies have high entry barriers, but there are still opportunities to achieve breakthroughs and enjoy high demand and high profit margins in the US market.
2. The throttling logic is to increase the degree of vertical integration and highlight scale effects, strengthen cost control, and further enhance the profit center.
Furthermore, the company deployed the BIPV field in '17, and is expected to increase its performance driven by the growth of distributed demand.
Profit forecast and valuation: We expect the company to achieve net profit of 3.5/5.3/660 million yuan in 2023-2025, an increase of 696%/50%/25% year-on-year. The current stock price corresponds to PE 32.9/22.0/17.6 times, respectively. Optimistic about the company's performance development, the first coverage gave it an “increase in wealth” rating.
Risk warning: demand for installed equipment falls short of expectations, rapid rise in raw material and freight prices, intensification of industry competition, risk of untimely updating of research and usage information, risk of deviations in industry size estimates, etc.