Incident: The company released its 2023 annual report. In 2023, it achieved operating income of 10.290 billion yuan, a year-on-year increase of 58.21%, and achieved net profit of 442 million yuan, an increase of 13.00%; 2023Q4 achieved operating income of 2,891 billion yuan, an increase of 77.96% year-on-year, and realized net profit of 0.1 billion yuan, a year-on-year decrease of 98.56% and a decrease of 99.25% month-on-month. It is proposed to distribute a cash dividend of RMB 10.87 (tax included) for every 10 shares and increase by 4.8 shares.
Shipments of photovoltaic conductive silver paste exceeded 2,000 tons in 2023, and calculated depreciation will affect the company's performance in stages.
In 2023, the company shipped 2002.96 tons of photovoltaic conductive silver paste, becoming the first company in industry history to ship more than 2,000 tons of photovoltaic conductive silver paste, driving the sector's revenue to increase by 57.64% year on year to 10.204 billion yuan, and gross margin decreased by 1.77 pct to 9.64% year on year. Based on the precautionary principle, the company accrued impairment losses totaling 94 million yuan in 2023 (including credit impairment losses of 46 million yuan and asset impairment losses of 48 million yuan), which affected the company's net profit performance in 2023 in stages.
R&D investment remains high, and production capacity building+layout is progressing steadily upstream.
(1) In the context of the accelerated iteration of photovoltaic cell technology, the company continued to increase core technology research and development. In 2023, the company invested 643 million yuan in R&D, an increase of 200.47% over the previous year, and its share of operating revenue increased by 2.94 pcts to 6.24%, breaking through and innovating on many key photovoltaic metallization technologies such as “LECO sintered high-performance silver paste”, “P-Poly low-contact composite silver paste technology”, and “0BB high-efficiency and low-cost silver paste technology”. As of December 31, 2023, the company has a total of 244 R&D personnel, and has obtained 328 invention patents and 41 utility model patents. Sufficient technical reserves can guarantee the company's long-term development.
(2) Against the backdrop of continued increase in demand for silver paste, the company is steadily expanding its production capacity. After the “3,000 ton conductive silver paste project (phase I) and the Changzhou Engineering Technology Center upgrade project” were put into operation in 2023, the company's overall domestic production capacity increased to 3,000 tons. At the same time, the company has completed the registration of its subsidiary Juhe (Thailand) in Thailand, and has completed the construction of a project with an annual output of 600 tons of silver paste. In addition, the company completed the 100% equity acquisition of Juyouyin with its own capital of 173 million yuan, plans to invest 1.2 billion yuan to build a “high-end photovoltaic electronic material base project” in Changzhou (with an annual output of 3,000 tons of electronic grade silver powder), and plans to invest 300 million yuan to promote the “Special Electronic Functional Materials Factory and R&D Center Project” (with an annual output of 300 tons of glass powder) to continuously improve the implementation and construction of production capacity related to upstream products and the industrial chain.
Maintaining a “buy” rating: Affected by factors such as changes in processing costs for silver paste products and the rapid increase in the company's N-type product shipments, we adjusted the company's profit forecast. The company is expected to achieve net profit of 8.15/9.61 billion yuan (7% down/ 5% down/increase) in 24-26. The current stock price corresponds to 12 times PE in 24 years. Demand for silver paste in the industry will maintain a steady growth trend in the context of technological iteration. The company's brand and product competitiveness advantages will guarantee the continuous increase in the company's positive silver paste product shipments. Coupled with the profitability improvements brought to the company by a further reduction in raw material costs after the company successfully acquired Jiangsu Lianyin, it will maintain a “buy” rating.
Risk warning: The scale of new PV installations fell short of expectations; progress in metallization process technology exceeded expectations, and the decline in battery silver usage exceeded expectations; rising silver prices above expectations affected the company's performance; risk of sub-IPO adjustments.