Incident Overview

The company released its 2023 annual report. In 2023, the company achieved revenue of 3.88 billion yuan, +1.14% year on year; net profit to mother of 1,024 million yuan, +1.72% year on year; net profit after deducting non-return to mother of 999 million yuan, +2.47% year over year. Gross profit margin 38.58%, YoY +0.27pct; Net Profit Margin 26.49%, YoY -0.11pct.

According to estimates, the company achieved revenue of 1,008 billion yuan in Q4, -1.1% year-on-year, +12% month-on-month; net profit to mother of 310 million yuan, -1.85% year-on-year, +39% month-on-month; net profit after deducting non-return to mother of 271 million yuan, -2.08% year-on-year, +23.74% month-on-month. Gross profit margin 38.26%, -0.17pct yoy, -0.25pct month-on-month; net profit margin 30.77%, -0.42pct yoy, +5.84pct month-on-month.

Pressured by the economic environment and PV demand, the company's revenue growth slowed in 23. By sector, the PV market continued its rapid growth trend in the second half of the year, and overall demand slowed in the second half of the year. The NEV market benefited from a further increase in NEV penetration, and sales increased. The industrial control, home appliance, and lighting markets were affected by the economic environment, and overall demand declined; it is expected that the PV market will return to the rapid growth track in the future as the PV market returns to the growth curve and the NEV penetration rate further increases.

Actively layout the new energy market, which is expected to grow steadily in 24 years

1) The company fully enjoys the development dividends of the industry, actively lays out the fields of photovoltaic wind power energy storage and new energy vehicles, and closely grasps the development trend of new energy sources. In addition, independent R&D and production of metallized film materials for film capacitors have been realized. Through technology research and development, improving the level of equipment automation, optimizing supply chain management, and improving information system construction, the company's overall competitiveness has been further enhanced. 2) At present, the company's main products have entered the domestic and foreign mainstream brand supply chains. The customers are of high quality and the technical level is high. We expect that with the upgrading of the NEV voltage platform in the future, the amount of film capacitors used in bicycles will further increase; and as demand in the fields of photovoltaics, wind power, and energy storage continues to grow, the company's thin-film capacitor business will further increase in volume. 3) In 24, the company expects to maintain steady revenue growth. While continuing to consolidate its market share in traditional markets, the company will further explore the global new energy market, rail transit market, and power grid market, be market-oriented, focus on R&D to ensure the progress of new products, further improve production management, promote lean production, accelerate the improvement of the level of automation, improve product quality, and reduce production costs.

Investment advice

Considering fluctuations in the surrounding environment and increased competition in the industry, we expect net profit to be 1,231 million yuan/1,467 billion yuan/1,689 billion yuan in 2024/2026 (previously estimated net profit of 24/25 was 1,581,976 billion yuan). Referring to the 2024/3/25 closing price, PE was 18/15/13 times, respectively, maintaining a “buy” rating.

Risk warning

Downstream demand falls short of expectations, prices of major raw materials fluctuate, industry competition intensifies, and the risk that information used in research reports is not updated in a timely manner