Description of the event
The company released its 2023 annual report. For the full year of 2023, the company achieved operating income of 9.60 billion yuan, and realized net profit of 390 million yuan, or +2336.5% year over year; of these, Q4 achieved revenue of 3.51 billion yuan, +203.3% year over year, and realized net profit of 90 million yuan, or +3.3% month on month.
Incident reviews
Photovoltaic silver paste shipments have increased rapidly, and the share of N-type products has increased quarterly. In 2023, the company achieved sales of 1713.6 tons of photovoltaic conductive silver paste, +137.9%; of these, N-type TopCon battery silver paste was 1008.5 tons, accounting for 58.9% of total sales. Q4 Company shipped 595 tons of photovoltaic conductive silver paste; of these, TopCon silver paste shipped 474 tons. The company's Q1/Q2/Q3/Q4 TopCon silver paste accounted for 34.1%/46.1%/57.4%/79.6% of total PV silver paste shipments in 2023, respectively. The share of N-type shipments increased rapidly in the fourth quarter, leading the industry. As TopCon's production capacity continues to expand, the company's annual shipment volume is expected to reach 2500-3000 tons in 2024, maintaining rapid growth.
Continuously increasing investment in R&D, LECO's leading edge is remarkable. In 2023, the company invested 310 million yuan in R&D, +169.5% year-on-year. By the end of 2023, the company had 233 R&D technicians, accounting for 38.3% of the total number of employees; the company had 22 invention patents and 58 utility model patents, respectively. Based on continuous high investment in R&D, the company launched the first batch of LECO product solutions and led the promotion of mass production in the industry. In addition, the company's low-temperature silver paste and silver-coated copper paste products for N-type HJT batteries have been shipped on a large scale, and the new IBC battery metallized paste has also been supplied and delivered.
Strengthen cost control and optimize the industrial structure. The company continues to strengthen cost management and promote the replacement of domestic silver powder. Currently, the company's PERC battery silver paste accounts for nearly 80% of domestic powder, and TopCon battery's domestic powder accounts for about 50%. The company has built a production line for high-performance electronic materials such as silver nitrate, metal powder, and electronic paste to strengthen its competitive advantage. In terms of semiconductor products, the company focuses on three major directions: silver paste for LED and IC chip packaging bonding, sintered silver products for power semiconductor chip packaging, and AMB ceramic copper-clad plate brazing paste for power semiconductor packaging. In the future, it will continue to upgrade and iterate products to further expand the product application direction.
Investment advice
The company is a leading company in photovoltaic silver paste. With the large-scale release of N-type batteries, its competitive advantage continues to strengthen. We expect the company's net profit to the parent company in 2024-2026 to be 6.2/8.2 billion yuan, up 61.0%/32.5%/23.5% year-on-year respectively. EPS for 2024-2026 was 6.18/8.19/10.11 yuan respectively, corresponding to the closing price on March 5, 2024. PE was 12.8/9.6/7.8 times, maintaining a “buy-A” rating.
Risk warning
Risk of policy changes; risk of price fluctuations of products and raw materials; new PV installations falling short of expectations; increased market competition, etc.