Recently, the company announced its 2023 results. In 2023, it achieved operating income of HK$26.629 billion, up 29.6% year on year; profit attributable to shareholders of HK$4.187 billion, up 9.6% year on year; basic profit per share of HK$0.47. The company plans to pay a final dividend of HK$0.15, with a dividend ratio of about 31.9%. The company's 2023 results slightly exceeded market expectations.
The 2023 results slightly exceeded market expectations. According to data from the National Energy Administration, the country's new grid-connected capacity for photovoltaic power generation in 2023 was about 216.88 GW, a significant increase of 148.1% over the previous year. Driven by strong growth in PV installed capacity across the country, the company achieved main business revenue of HK$26.629 billion, an increase of 29.6% over the previous year. Among the company's two major business segments, solar glass sales revenue increased 33.3% year over year to HK$23.53 billion, gross profit increased 20.04% year over year to HK$5,034 billion; revenue from solar farms increased 8.24% year over year to HK$2.97 billion, and gross profit increased 531 to HK$2,036 million year over year. The company's overall gross profit margin in 2023 was 26.62%, with the gross margins of the solar glass business and solar farm business being 21.29% and 68.54% respectively.
The gross margin of solar glass rebounded sharply in the second half of the year. In the second half of 2023, benefiting from the recovery in the average sales price of solar glass and the decline in raw materials and energy costs, the gross margin of the company's solar glass business improved dramatically, from 15.2% in the first half of the year to 26.4% in the second half of the year, causing the annual gross margin of solar glass to rise to 21.29% at the end of 2023, which is only slightly lower than about 2 percentage points in 2022. It is expected that with the steady growth of photovoltaic installations and the slowdown in photovoltaic glass production capacity growth, the solar glass market supply and demand pattern may shift from relatively abundant to stable supply, and there is still room for further improvement in the company's solar glass gross margin.
The expansion of production capacity strengthens the leading edge. During the reporting period, the company continued to accelerate the increase in solar glass production capacity to consolidate its market leadership. By the end of 2023, the company added 6 new production lines with a daily melting capacity of 1,000 tons. The daily melting capacity of solar glass reached 25,800 tons, an increase of 6,000 tons over the beginning of the year. With new production capacity and leading market share, the company's solar glass sales increased 49.3% year-on-year in 2023, and solar glass revenue increased 33.3%.
Profit forecast and valuation: The company's revenue for 24-26 is estimated to be HK$322.6/391.5/47.59 billion, with net profit attributable to mother of HK$57.9/69.2/HK$8.78 billion, and corresponding earnings per share of HK$3.56/4.56/ 6.82, respectively. The price-earnings ratios corresponding to the current stock price are 8.09/6.77/5.33 X, respectively. Given a “buy” investment rating, the company's target price is HK$7.22, corresponding to PE 11.1 X in 2024.
Risk warning: The increase in new PV installations fell short of expectations; the price of solar glass was drastically adjusted.