Key points of investment
Incident: The company released its 2023 annual report. In 2023, it achieved revenue of 5.44 billion yuan, an increase of 23.61%; net profit to mother was 845 million yuan, an increase of 28.79%. Among them, 2023Q4 revenue was 1,371 billion yuan, down 17.46%, up 10.06%; net profit to mother was 154 million yuan, down 26.75% and 19.45%. The gross margin for 2023 was 32.89%, up 1.10pct year on year; the net profit margin to the mother was 15.54%, up 0.63pct; the 2023Q4 gross profit margin was 32.71%, down 0.70pct and 0.44pct; the net profit margin to mother was 11.21%, down 1.42pct and 4.11pct.
As a result of overseas household storage inventories, energy storage delivery fell short of expectations in '23, and charging piles doubled. In 2023, the company's optical storage and charging revenue was 2.69 billion yuan, an increase of 38%. Among them, we expect energy storage revenue of about 1.6 billion yuan, an increase of 20% +, and charging pile revenue of about 200 million yuan, a double increase of 50% +; in 2023, the gross profit margin for optical storage and charging was 26.5%, an increase of 1.9 pcts over the same period last year. The company confirmed receipt of 1.21 billion yuan in Solaredge supply in 2023. The delivery of the previous order of 1.46 billion yuan was slightly delayed, mainly due to high customer inventory and slow delivery. In 2023, the company achieved many achievements in overseas optical storage certifications. At the same time, it actively cooperated domestically with China Power Investment and CNNC, etc., and has now become a global+ all-scenario optical storage supplier. In the charging pile business, the company plans to increase breakthroughs in the power grid market, speed up certification of European standard, Chademo and North American standard charging pile products overseas, and create new growth for the new energy business. In 2024, under the product+channel layout that the company continues to promote, we expect growth to resume after household storage inventory is eliminated in 2024, charging pile revenue will continue to double, and PV inverter revenue will increase by 30-40%.
Data centers are taking advantage of high growth and are actively deploying to achieve breakthroughs in various fields. Data center business revenue increased 13% in 2023, contributing 2.67 billion yuan for the whole year, and gross margin increased by 2.2 pct to 38.1%. The company has launched highly adaptable products for today's rapidly developing computational power data centers. In addition, the company followed up on the implementation of the East Digital and Western Computing Project, focusing on laying out the high-end medium- and high-power UPS market, further increasing and expanding the market share of high-end products. Financial customers such as the Bank of China and the Industrial and Commercial Bank of China were successfully selected and shortlisted in 2023, successfully delivered data center projects such as the Hangzhou Asian Games emergency protection project and Wudang Mountain Cloud Valley, etc., and continued to cultivate and make key breakthroughs in various industries and fields of markets. We expect data center business revenue to grow 15% + in 2024 with the rapid development of AI and the company's multi-sector layout!
23Q4 fee rates increased month-on-month, and inventory increased throughout the year due to order preparation. The cost rate for the 2023 period was 12.42%, an increase of 0.97 pct; the cost rate for the Q4 period was 16.42%, +0.97/+2.72pct compared to the same period. Sales and management expenses increased respectively due to business development and equity incentive expenses. At the same time, more new energy storage and data center products were being developed, and the R&D cost rate continued to grow. Inventory at the end of 2023 was 1.1 billion yuan, an increase of 15%, mainly due to an increase in order preparation; credit impairment of 56 million yuan was mainly due to bad accrual of accounts receivable.
Profit forecast and investment rating: Based on overseas account storage still in the inventory phase and future industry growth rate or lower than expected, we lowered our 2024-2025 profit forecast. We expect 2024-2026 net profit of 8.9/11.2/1.45 billion yuan (value of 15.8/2.04 billion yuan before 24/25), +5%/+26%/+30% year-on-year, corresponding to PE15x/12x/9x, maintaining the “buy” rating.
Risk warning: Industry demand and company shipments fall short of expectations, increased competition, etc.