Incident: The company released its 2023 annual report. In 2023, the company achieved operating income of 686 million yuan, an increase of 5.59% over the previous year, and realized net profit of 220 million yuan, an increase of 14.95% over the previous year. 2023Q4 achieved operating income of 143 million yuan, an increase of 8.61% year on year and a decrease of 32.71% month on month; realized net profit of 34 million yuan, an increase of 12.09% year on year and a decrease of 55.07% month on month.
Photovoltaic power generation is progressing steadily, and its share of revenue is increasing. During the reporting period, the company achieved photovoltaic power generation revenue of 595 million yuan, an increase of 12.77% over the previous year, with a gross profit of 391 million yuan and gross margin of 65.66%. The steady increase in the company's photovoltaic power generation business revenue during the reporting period was mainly due to the continuous expansion of the scale of the company's own power plants and the simultaneous increase in photovoltaic power generation. During the reporting period, the company's own power generation capacity was 808 million kilowatts, an increase of 19.73% over the previous year.
Refinancing increases the construction of distributed photovoltaic power plants. By the end of the reporting period, the total grid-connected capacity of the company's own distributed photovoltaic power plants was about 828 MW, an increase of about 102 MW compared to the beginning of the period. During the reporting period, the company successfully issued convertible corporate bonds and raised a total of 800 million yuan in capital for distributed photovoltaic power plant construction and bank loan repayment. According to the announcement, the construction cycle of the project is about 1 year, and the total installed capacity after completion is about 166.26 MW. Among them, distributed photovoltaic power plant construction projects are distributed in the six economically developed regions of Zhejiang, Jiangsu, Guangdong, Hubei, Anhui, and Tianjin. The company continues to expand its asset scale and promote the layout of photovoltaic power plants in regions with high electricity prices, high power consumption, and high quality enterprises. It is expected that the commissioning of the project will effectively increase the company's power plant business profit.
PV module sales are under pressure, waiting for the industry to balance supply and demand. During the reporting period, the company's photovoltaic products achieved revenue of 51 million yuan, a year-on-year decrease of 38.8%, gross margin fell to -2.1% (year-on-year -4.44pp), EPC projects achieved revenue of 0.17 million yuan, a year-on-year decrease of 39.9%, and gross margin fell to 7.6% (-12.28pp). The scale of the business contracted, and revenue and gross profit were under corresponding pressure. During the reporting period, the company was mainly affected by phased overcapacity in the photovoltaic industry and temporary imbalance in the supply and demand relationship. The industry's PV module and EPC prices continued to fall. Therefore, depending on gross margin, it sold PV modules and accepted EPC orders. As the PV industry's backward production capacity gradually cleared, the PV industry chain price stabilized, supply and demand gradually recovered, and the gross margin of the company's photovoltaic product business and EPC business is expected to be repaired.
Profit forecasting and investment advice. The company's net profit for 24-26 is estimated to be 280 million yuan/330 million yuan/380 million yuan respectively, corresponding to the 24-26 PE of 17/14.2/12.4 times, respectively, maintaining a “buy” rating.
Risk warning: New business development or falling short of expectations; self-owned distributed photovoltaic power plants falling short of expectations; risk of rising raw material prices; risk of electricity price reduction.