Event: The company released its 2023 annual report. In 2023, the company achieved revenue of 16.329 billion yuan, a year-on-year decrease of 47.22%. Net profit attributable to mother was 5.763 billion yuan, a year-on-year decrease of 69.86%.
Achieved net profit of 5.776 billion yuan after deduction, a year-on-year decrease of 69.84%. Among them, revenue for the fourth quarter of 2023 was 3.451 billion yuan, down 44.90% year on year, net profit to mother was 648 million yuan, down 83.95% year on year, and net profit after deducting 934 million yuan, down 76.88% year on year. The decline in the company's revenue and profit was mainly due to a drop in the price of its main product, polysilicon. In 2023, new polysilicon production capacity was released one after another, and supply increased dramatically, leading to a rapid decline in polysilicon prices, and both the company's revenue and profit declined.
Production and sales remained high, and profitability improved in Q4. The company achieved 61,000 tons of polysilicon production and 59,900 tons of sales in 2023Q4, maintaining a high level of production and sales. The company's Q4 polysilicon price was 57,400 per ton, an increase of 3.21% over the previous month. In terms of profit, the company's profitability in the fourth quarter recovered compared to the third quarter. The gross sales margin in the fourth quarter reached 19.70%, and the net sales margin after deduction reached 27.07%, up 4.76 pct and 15.34 pct respectively from the third quarter. In a market where silicon prices are falling, the company's profit situation is still improving.
Production capacity is being released steadily, and industrial silicon is arranged to improve supply capacity. The company's Baotou Phase I production capacity of 100,000 tons of polysilicon has reached production, and the current production capacity is 20.5 tons/year. The Baotou Phase II production capacity of 100,000 tons is expected to be put into operation in 2024Q2. At that time, the polysilicon production capacity will reach 30.5 tons/year. The company lays out industrial silicon to effectively improve insurance and supply capacity. Currently, among other fund-raising projects, a semiconductor polysilicon project with an annual output of 1,000 tons was completed and put into operation in 2023Q2, and a high-purity silicon-based material project with an annual output of 100,000 tons is under construction.
The technical level continues to improve, and the amount of N-type silicon material is rapidly released. In 2023, the company implemented a number of cost reduction and efficiency measures, with remarkable results. The unit cash cost of polysilicon was reduced from 53.06 yuan/kg in 2022 to 42.70 yuan/kg, a decrease of 19.53%. In 2023, the company sold 53,200 tons of N-type silicon, of which N-type silicon sales accounted for 59.11% in December. The company deployed N-type technology ahead of schedule, so in this round of product iteration, the company quickly released the amount of N-type silicon material, and the proportion continued to increase.
Profit forecasting and investment ratings. We expect the company's net profit to be 28.2/3.47/4.06 billion yuan in 2024-2026, with earnings per share of 1.32/1.62/1.89 yuan, and corresponding PE 19.6/15.9/13.6 times, respectively. We maintain the company's “buy” investment rating.
Risk warning: The imbalance between supply and demand has further reduced the price of polysilicon; rising raw material prices have led to a decline in gross margin.