The company's business situation in 2023: According to the company's 2023 report, the company achieved operating income of 22.589 billion yuan in 2023, an increase of 19.7% over the previous year; realized net profit of 1,850 million yuan to mother, an increase of 17.2% over the previous year. Among them, 2023Q4 achieved revenue of 5.939 billion yuan, a year-on-year increase of 11.4% and a decrease of 1.6% month-on-month; realized net profit of 419 million yuan, an increase of 827.9% year-on-year and a decrease of 23.3% month-on-month.
Sales of adhesive film and aluminum-plastic film grew rapidly, and backboard sales increased steadily. According to the company's 2023 annual report, the company sold 2,249 million square meters of photovoltaic film, with a year-on-year increase of 70.2%; sales of photovoltaic backpanels were 151 million square meters, up 22.7% year on year; sales of photosensitive dry film were 115 million square meters, up 4.5% year on year; and sales of aluminum-plastic film were 10 million square meters, up 67.9% year on year. According to the company's project investment announcement, the company is carrying out projects such as Lin'an with an annual production of 300 million square meters of adhesive film, Thailand with an annual production of 250 million square meters of adhesive film, and Vietnam with an annual output of 30 million square meters of backboards. It is expected that production capacity will be further released in the future.
Q4 Gross margin increased by 3.2 pct, and the photovoltaic film market improved in March-April. According to the company's regular reports for 2023, the company's gross margin for the full year of 23 was 14.6%, down slightly from 15.6% in '22; among them, 23Q4's gross margin was 16.3%, up 3.2pct from month to month. According to data from Baichuan Yingfu and the Silicon Industry Branch of the China Nonferrous Metals Industry Association, the price of PV EVA particles rose steadily in March, and the price of photovoltaic film also increased. Combined with the situation where module emissions reached 54 GW in March, we believe that if downstream demand performance remains strong in April, demand for PV film in April will be strongly supported.
The company has a rich stock of N-type packaging solutions. According to the company's 2023 annual report and China Knowledge Network's “Research on Changing Efficient Component Packaging Technology” (written by Zhou Guangda), 2024 is a critical year for components to shift from P type to N type. Under industry trends such as reduced film weight and reduced single-glass ratio brought about by SMBB technology, the company has laid out various packaging product matrices for TopCon, HJT, and XBC components.
The scale of the electronic materials business was expanded, and the functional film business resources were integrated. According to the company's 2023 semi-annual report and annual report, 1) The company's electronic materials products were successfully introduced into listed PCB companies such as Dongshan Precision, Oshcon, Zhongfu Circuit, Zhongjing Electronics, and Mankun Technology in 23H2. With the expansion of the electronic materials business and product upgrades, it will break through more high-end customers in the future; 2) The company's aluminum-plastic film products have gone through early capacity investment and customer verification, and have now begun to enter the sales volume stage and successfully introduced some power battery customers such as Ganfeng Electronics and Nandu Power. We expect the release of related products to bring more incremental revenue.
Profit forecast and rating: We expect the company's net profit to be 26.96 billion yuan, 31.37 billion yuan, and 37.24 billion yuan respectively for 24-26, up 45.7%, 16.4%, and 18.7% year-on-year. As a leader in photovoltaic film, the company's profitability remains industry-leading. Refer to comparable companies that gave the company a 22-24 times PE valuation in 2024, corresponding to a reasonable value range of 31.90-34.80 yuan, giving it a “superior to the market” rating.
Risk warning: Risk of new PV installations falling short of expectations; risk of industry and market competition.