The company's business situation in 2023: According to the company's 2023 report, the company achieved operating income of 9.603 billion yuan in 23, an increase of 154.94% over the previous year; achieved net profit of 386 million yuan to mother, turning a loss into a profit over the previous year. Among them, 2023Q4 achieved revenue of 3.506 billion yuan, a year-on-year increase of 203.41% and a month-on-month increase of 33.74%; realized net profit to mother of 93 million yuan, turning a loss into a profit over the previous year, and an increase of 3.37% month-on-month. The company's revenue continued to grow rapidly and continue to be profitable throughout the year, a significant improvement over '22.
The gross margin is stable, and in line with the N-type trend, it may bring gains. According to the company's 2023 annual report, the company achieved an overall gross profit margin of 11.14% in 2023, of which the 2023Q4 gross profit margin was 11.11%, which remained stable compared to Q2 and Q3. In '23, the company's sales volume of silver paste products reached 1,714 tons, with a year-on-year increase of 137.89%, of which N-type TopCon products accounted for 58.9%; N-type products place higher demands on silver paste quality and have higher processing costs, and we believe gross margin is expected to improve accordingly.
The first dividend transfer+equity incentives balance both internal and external factors, showing full confidence. 1) According to the board resolution announcement issued by the company on February 29, the company plans to distribute a cash dividend of 8.00 yuan (tax included) for every 10 shares and 4 shares for every 10 shares. This is the first time since the IPO; 2) The company issued an equity incentive plan on November 15, 2023, granting 3.5626 million restricted shares to 80 incentive recipients, accounting for about 3.55% of the total share capital of the company on the announcement date. The grant price is 35.62 yuan per share. We believe that whether it is the first profit distribution or the current equity incentive, it conveys the company's strong confidence from within and out, and is optimistic about its potential for continued development in the future.
N-type TopCon segment leader, the company seizes industry opportunities. According to the Investor Relations Record Form of 2/29/24, the company's market share in N-type silver paste is in the leading position in the industry; the company has deep experience in TopCon silver paste R&D and benefits from the rapid application of laser-assisted sintering (LECO) technology, and the company's advantages in the TopCon silver paste market segment may expand further. We believe that the rapid growth in downstream TopCon demand will give the company strong momentum and guarantee future competitiveness.
Take into account other businesses and expand a wide range of borders. 1) According to the Investor Relations Record Form of September 19, 23, the company is promoting the low temperature pure silver and low temperature silver coated copper paste routes for HJT, and has achieved stable mass production at leading customers in the industry; 2) According to the company's public account, the company is making rapid progress in the semiconductor paste field, and the paste products of its Pai Tai platform have progressed well in customer testing. We believe that with the company's technical expertise in the field of paste, Pai Tai is expected to become a leading supplier of power semiconductor packaging materials.
Profit forecast and rating: We expect the company's net profit to be 6.28, 7.81, and 946 million yuan respectively for 24-26, up 62.8%, 24.5%, and 21.0% year-on-year. As a leader in photovoltaic silver paste, the company maintains industry leadership in scale and technology. Refer to comparable companies that gave the company a 15-16 times PE valuation in 2024, corresponding to a reasonable value range of 93.73-99.98 yuan, giving it a “superior to the market” rating.
Risk warning: risk of downstream demand falling short of expectations; risk of cyclical industry fluctuations; risk of market competition, etc.