Revenue grew rapidly, and performance turned loss into profit
The company's main products are conductive silver paste for crystalline silicon photovoltaic cells. Conductive silver paste is mainly used in the metallization process of photovoltaic cells. Its performance directly affects the photoelectric conversion efficiency of photovoltaic cells and the output power of photovoltaic modules. It is a key core material for the photovoltaic industry to improve efficiency and reduce costs through technological innovation. The company has been deeply involved in the field of photovoltaic conductive silver paste for many years, and has established long-term and stable cooperative relationships with well-known downstream enterprises, and has been widely recognized by manufacturers including Jingke, Jingao, Tianhe, and Aixu.
Benefiting from strong demand in the global photovoltaic market and rapid industrialization of N-type batteries, the company achieved rapid growth in both revenue and net profit in 2023: in 2023, the company achieved operating income of 9.603 billion yuan, up 154.94% year on year; realized net profit of 386 million yuan, turning loss into profit; gross margin was 11.14%, up 2.34pct year on year; net interest rate was 3.93%; sales/management/R&D/finance expense ratios were 0.86%/0.36%/3.23%/1.56%, respectively, of which R&D investment was 310 million yuan This was a year-on-year increase of 169.52%.
The share of N-type shipments is increasing rapidly, and it is expected to be the first to benefit from the accelerated increase in LECO's share of TopCon silver paste shipments. With the release of downstream TopCon production capacity, the company's TopCon silver paste shipments increased dramatically, and the sales share continued to increase: in 2023, the company shipped 1713.62 tons of photovoltaic silver paste, an increase of 137.89% over the previous year. Among them, TopCon silver paste shipped 1008.48 tons, accounting for 58.85% of total PV silver paste sales, becoming the first TopCon silver paste company in the industry to sell more than 1,000 tons, and the industry position improved significantly. The Q4 company shipped 595 tons of photovoltaic silver paste, of which 474 tons of TopCon silver paste were shipped. The share of TopCon silver paste shipments accelerated to 79.6% in a single quarter. Benefiting from the rapid industrialization of TopCon, the company's business is still in a period of rapid development. The company expects to ship 2,500 to 3000 tons of photovoltaic silver paste in 2024, and TopCon silver paste shipments will further increase, which is expected to achieve a sharp increase in volume profit.
It is expected to be the first to benefit from the introduction of the LECO process. Laser-assisted sintering technology (LECO) has an outstanding effect on improving the conversion efficiency of TopCon batteries. It can improve battery conversion efficiency by more than 0.3%, and the same component gain can reach 5 to 10 W. Most companies have planned to introduce it, and it is expected to become the standard process in the industry in 2024. The LECO process corresponds to the simultaneous increase in processing cost premiums for silver paste and technical barriers. Currently, the company is leading the industrialization of LECO slurry, leading product performance, and is expected to be the first to enjoy the dividends of LECO slurry mass production.
Actively expand the application fields of slurry products. In addition to TopCon silver paste, the company's HJT low temperature silver paste, silver coated copper paste, and IBC metallized paste have all been industrialized. The company is also actively developing ultra-low temperature curing conductive paste for perovskite/crystalline silicon laminated batteries; in the semiconductor electronics field, the company is expanding sintered silver and AMB ceramic copper clad plate brazing paste for power semiconductor packaging.
Strengthen cost management and promote the introduction and replacement of domestic silver powder
As the stability of domestic silver powder improves and the acceptance of domestic silver powder by downstream customers increases, the company cooperates with downstream customers' demand to reduce costs and increases the usage ratio of domestic silver powder, which is conducive to ensuring supply chain safety and reducing the risk of costs and fluctuations in silver points and foreign exchange. At present, the proportion of domestic powder used in the company's PERC battery silver paste has reached more than 80%; the proportion of domestic powder used in TopCon battery silver paste is about 50%; HJT products currently mainly use imported silver powder, and there is still room for cost reduction.
Profit forecasting
It is predicted that the company's revenue for 2024-2026 will be 136.79, 16.6.28, 19.533 billion yuan, and EPS will be 6.42, 7.77, and 9.25 yuan respectively. The PE corresponding to the current stock price is 12.5, 10.3, and 8.7 times, respectively. As the penetration rate of TopCon and LECO silver paste continues to increase, it is optimistic that the company's silver paste business volume will rise rapidly and be covered for the first time, giving a “buy” investment rating.
Risk warning
There is a risk that the installed capacity demand in the photovoltaic industry falls short of expectations, the risk of rapid decline in the unit consumption of silver paste for photovoltaic cells, the risk of raw material price fluctuations, the risk that the LECO process in the photovoltaic industry falls short of expectations, the risk that production capacity construction progress falls short of expectations, and the risk of increased competition.