Incident: The company released its 2023 annual report. In 2023, it achieved operating income of 9.603 billion yuan, a year-on-year increase of 154.94%, achieved net profit of 386 million yuan, an increase of 2336.51% over the previous year, and realized net profit withheld from non-mother of 343 million yuan, an increase of 2829.96% over the previous year. The fourth quarter of 2023 achieved operating income of 3,506 billion yuan, a year-on-year increase of 203.41%, a month-on-month increase of 33.74%, and realized net profit of 93 million yuan, an increase of 395.41% year-on-year and 3.37% month-on-month.
TopCon battery technology has entered a period of industrial explosion, and the company's N-type slurry has doubled in profit. In 2023, the company sold 1713.62 tons of photovoltaic silver paste, an increase of 137.89% over the previous year; of these, N-type silver paste shipped 1008.48 tons, accounting for a rapid increase to 58.85% of total shipments, which is the leading position in the industry. With the increase in the number of new photovoltaic installations around the world and the advancement of photovoltaic technology, TopCon battery technology has entered a period of industrialization explosion, leading to an increase in silver paste consumption per unit and processing costs per unit.
As a leading company in photovoltaic conductive silver paste, the company has seized the opportunity of N/P switching and is at the cutting edge of the market. TopCon silver paste technology continues to lead the way, and the share of N-type paste sales continues to increase, driving the company's overall output and profitability to further consolidate the company's leading position in the industry.
The amount of LECO slurry was released quickly, and the company enjoyed the first-mover advantage. LECO paste can improve the efficiency of TopCon batteries by 0.3-0.5% by combining it with laser-assisted sintering technology. The company is leading the industrialization and large-scale mass production of new metallization processes represented by laser-enhanced sintering, and has a leading edge in LECO slurry technology. Due to technical difficulties and high maintenance and operation requirements, LECO slurry's product premium is higher, and related processing costs are expected to increase. With the full switching of LECO technology by battery manufacturers, the company LECO silver paste will achieve large volumes, and it is expected that it will be the first to enjoy the dividends of LECO slurry mass production.
Strengthen investment in R&D and continuously improve product competitiveness. The company spent 310 million yuan on R&D in 2023, an increase of 169.52% over the previous year, accounting for 3.23% of R&D investment. In the field of photovoltaic new energy, the company continues to promote efficiency and cost reduction of conductive silver paste for P-type batteries; accelerate mass production of advanced processes such as laser-enhanced sintering and ultra-thin phosphorus-doped polysilicon layers on the back; strengthen the competitiveness of the full range of conductive silver paste products for TopCon batteries; and accelerate the iterative improvement of HJT battery low temperature silver paste and silver coated copper paste solutions for new IBC batteries. In the field of semiconductor electronics, the product portfolio of silver paste for chip packaging has been continuously upgraded, and sintered silver and AMB ceramic copper-clad plate brazing pastes for power semiconductor packaging have been expanded. In the future, the company will continue to make full use of its R&D advantages and continuously expand the application areas and markets of the company's products.
Profit forecasting and investment ratings. We expect the company's net profit to be 6.4/7.9/890 million yuan in 2024-2026, with earnings per share of 6.35/7.82/8.82 yuan, and corresponding PE 11.5/9.3/8.3 times, respectively. For the first coverage, we gave the company a “buy” investment rating.
Risk warning: Downstream installed capacity demand layout expectations; increased industry competition has led to a decline in profitability.