Event: The company released its 2023 annual report. The company achieved total revenue of 2,879 million yuan in 2023, an increase of 47.68% over the previous year; realized net profit of 202 million yuan to mother, an increase of 70.00% over the previous year.

Among them, the total revenue of 2023Q4 in a single quarter was 594 million yuan, -14.96% year on year; net profit to mother was 121 million yuan, up 90.03% year on year. In 2023, the company distributed a cash dividend of 1.0 yuan (tax included) for every 10 shares to all shareholders, with a total cash dividend of 30.65 million yuan. The dividend ratio is 15%. The main reason is that the company is in a period of transformation, development and business expansion, and needs to reserve a certain amount of capital to ensure scale growth.

PV modules are growing rapidly, but overall export sales have declined a lot. By product, the company's main home appliance business performed steadily, and photovoltaic modules maintained rapid growth. In 2023, the company's revenue for home appliance components/optical communication modules/motors/solar photovoltaic modules was +12.12%/-16.16%/5.44%/75.96%, respectively; regionally, the decline in export sales was high. In 2023, the company's domestic sales and export sales revenue were 69.95%/-49.86%, respectively.

Net interest rates have been rising steadily, and the expansion of PV revenue has led to a high increase in cash flow. Gross profit margin: In 2023, the company's gross margin was +0.02pct yoy to 14.96%; in 2023Q4, the company's gross margin was 4.76pct yoy to 7.07%. Among them, the gross margin of PV modules increased by 2.96 pct year on year in 2023, and overseas gross margin increased by 5.46 pct year on year. Rate side: The 2023Q4 sales/management/ R&D/ finance rate was 2.01%/3.94%/-1.84%/0.21%, with a year-on-year change of 0.08pct/-0.14pct/-4.2pct/-0.25pct. Net interest rate: The net interest rate in 2023 changed 1.07pct to 7.40% year over year, and the 2023Q4 net interest rate changed 1.87pct to 3.63% year over year. Cash flow: Net cash flow from the company's operating activities increased by 171.30% year-on-year in 2023, mainly due to an increase in sales revenue from the PV business in the current period.

Outlook: Based on the home appliance sector, led by the new energy sector. 1) Overall business plan for 2024: Annual revenue is expected to be around 3 billion yuan, and operating profit and net profit will increase steadily. 2) Home appliance business: The company's current white goods business has a high market share and strong customer stickiness. In the future, the company will increase investment in R&D, maintain steady growth in performance, and expand the upstream, middle and downstream industrial chain. 3) PV module business: At the end of January 2024, the infrastructure project of Xingshuaier Photovoltaic Company was officially put into operation, and production capacity is gradually climbing. In the future, it is planned to further achieve 5GW/year production capacity in the shortest possible time.

Profit forecasting and investment advice. Considering the company's current PV business development progress and performance in 2023, we expect the company to achieve net profit of 2.41/2.93/358 million yuan in 2024-2026, an increase of 19.1%/21.4%/22.2% year-on-year, and maintain an “increase” investment rating.

Risk warning: Prices of raw materials fluctuate greatly, the expansion of the photovoltaic energy storage business fell short of expectations, and demand in the white power industry fell short of expectations.