Incident: The company released its 2023 annual report. In 2023, the company achieved operating income of 686 million yuan, +5.59% year over year; net profit to mother of 220 million yuan, +14.95% year over year; net profit after deducting non-return to mother of 213 million yuan, +13.75% year over year. Among them, the company achieved revenue of 143 million yuan in Q4 2024, +8.61% year-on-year; net profit to mother and net profit deducted from non-mother was 0.34/34 million yuan, respectively, +12.09%/+0.34% year-on-year.
Key points of investment:
The photovoltaic power generation business is progressing steadily, contributing to a stable performance base. In 2023, the company's photovoltaic power generation business achieved revenue of 596 million yuan, +12.77% year-on-year, gross profit margin of 65.66%, a slight increase of 0.10 pcts year-on-year, a net profit margin of 32.08%, and +2.62 pcts year-on-year, contributing to the company's steady performance base. According to the company's announcement, the increase in photovoltaic power generation revenue is mainly due to the steady increase in power generation capacity and revenue driven by the continuous expansion of the scale of self-owned power plants. At the end of 2023, the company's cumulative installed capacity of its own power plants was 828 MW, an increase of 102 MW compared to 2023. According to estimates that if force majeure factors such as prolonged overcast, rain, and snow are excluded, the total annual revenue of this part of the power plants will reach 605 million yuan (excluding tax) after power generation, and the gross profit can be further increased to 400 million yuan, which is expected to provide stable financial support for the company's industrial and commercial energy storage, household storage, and charging piles.
Profitability has been rising steadily, and results in cost reduction and efficiency are beginning to be seen. In 2023, the company's overall gross margin and net margin were 57.38%/32.08%, respectively, with year-on-year changes of +2.48/2.61 pct, respectively, and profitability steadily increased.
In terms of cost control, in 2023, the company's sales/management/ R&D/ finance expense ratios were 0.30%/7.74%/2.98%/10.66%, respectively. The year-on-year change was -0.11/-0.29/+0.28/ -0.71 pct, respectively, and the results of cost reduction and efficiency were beginning to show. Among them, the financial expense ratio, which accounts for a relatively large amount, was significantly reduced, mainly due to the early repayment of some long-term loans by the company, and with the decline in LPR and commercial loan interest rates, the company reduced stock and incremental loan interest rates through low interest rate swaps.
Lay out distributed power plant construction to open up the market, and expect the charging and storage business to expand. In October 2023, the company issued a convertible bond prospectus, which plans to invest a total of 723 million yuan for distributed photovoltaic power plant construction projects.
According to the annual report, the company has spread throughout the country in recent years. In 2023, the company achieved a significant increase in revenue in economically developed regions with high electricity consumption, high electricity consumption, good lighting conditions, and many high-quality enterprises that meet the company's investment requirements, such as Jiangsu, Guangdong, Tianjin, and Hubei. The expansion strategy outside the province has been very effective. In addition, the company is actively expanding the charging pile, household storage, and industrial and commercial energy storage business. Among them, the revenue of the charging pile business has reached 5.3464 million yuan in 23 years. The current base of household storage and industrial and commercial energy storage is small, and revenue and profits are expected to increase dramatically after large-scale promotion.
Profit forecast: The company is a scarce pure distributed photovoltaic operator. Considering that the company's industrial and commercial energy storage and household storage volumes will still take time, we lowered the company's net profit from 2024-2026 to 2.80, 3.37, and 399 million yuan (the previous value was 3.36 million yuan and 423 million yuan), respectively. The corresponding PE was 17, 14, and 12 times, respectively, to 22 times PE in 2024, and the target price was 12.31 yuan, maintaining the “buy” rating.
Risk warning: the risk that the project will not advance as expected; the risk that sales of energy storage products will fall short of expectations; there is a risk that the public data used in the research report may be later or not updated in a timely manner.