Core views:
Annual results maintained rapid growth, and 23Q4 pressure was evident. The company released its annual report on March 26. In 2013, the company achieved revenue of 6.184 billion yuan, +73.19% year on year, net profit of 1,461 billion yuan, +85.28% year on year, net profit after deducting non-return to mother of 1,435 million yuan, +91.32% year on year; looking at Q4 alone, the company achieved revenue of 1,973 billion yuan, +42.97% year on year, net profit to mother of 288 million yuan, -11.68% year on year.
Various businesses continue to grow. In terms of revenue composition, photovoltaic cutting equipment achieved revenue of 2,877 billion yuan in '23, +95.16%, gross profit margin of 32.19%, year-on-year -1.01pct; photovoltaic cutting consumables achieved revenue of 1,162 billion yuan, +38.36% year-on-year, gross profit margin of 58.55%, +15.45pct; silicon wafer and cutting processing services achieved revenue of 1,719 billion yuan, +84.99%, gross profit margin of 43.01%, year-on-year -2.44pct; other high-hardness and brittle cutting equipment and consumables achieved revenue of 225 million yuan, YoY +60.71%, gross profit margin 56.63%, +2.22pct year on year; services and other realized revenue of 47 million yuan, +100.91% year over year, gross profit margin 47.96%, +3.28pct year on year.
The slicing foundry business is under pressure. Taking the subsidiary of chip foundry services as an example, Leshan Gaosec achieved net profit of 805.277 million yuan in the first half of '23, and had a net profit of 62.8098 million yuan for the full year of '23, and had already lost money in the second half of '23; Yancheng Gaosec achieved net profit of 94.39 million yuan in the first half of '23, and achieved net profit of 95.619 million yuan for the full year of '23. Profitability in the second half of '23 fell sharply compared to the first half of '23. The drop in silicon wafer prices had a certain impact on profitability.
Profit forecasting and investment advice. We expect the company's net profit to be 1,429/17.54/1,968 billion yuan in 24-26 years. The “consumables+equipment+service” business model continues to be verified. Considering the gradual release of slicing production capacity and benefiting from continuous progress in battery technology and cutting technology, it will maintain a rapid growth rate in recent years. We gave the company a 24-year PE valuation of 16x, with a corresponding reasonable value of 67.42 yuan/share, maintaining a “buy” rating.
Risk warning. The risk of policy changes in the photovoltaic industry, the risk of silicon wafer price fluctuations, the risk of increased market competition, and the risk that production capacity cannot be absorbed as expected.