Incident: The company released the 2023 annual report and the first quarter report of 2024. In 2023, the company achieved net profit of about 151 million yuan, an increase of about 50.69% over the previous year, and realized net profit without deduction of about 141 million yuan, an increase of about 47.45% over the previous year. In the fourth quarter of 2023, net profit attributable to mother was about 34 million yuan, down about 24.75% from the previous month, and realized net profit from non-return to mother was about 0.27 million yuan, a decrease of about 38.59% over the previous quarter. In the first quarter of 2024, net profit attributable to mother was about 35 million yuan, an increase of about 2.80% month-on-month, and realized net profit deducted from non-return to mother was about 29 million yuan, an increase of about 6.54% over the previous quarter.
Expenses and raw material prices have risen, putting pressure on the company's profit performance in the short term. Direct materials for the company's photovoltaic welding belt products account for more than 90% of the main business costs. The recent rise in the prices of raw materials such as copper and tin has led to an increase in the cost of the company's products. At the same time, due to reasons such as share payment fees and interest expenses from issuing the company's convertible bonds in 2023, the company's management expenses and financial expenses all increased significantly compared to 2022, and the company's gross margin and profit for the fourth quarter of '23 and the first quarter of '24 were under certain pressure.
Demand for PV installations is growing steadily, opening up room for enterprise growth. The new installed capacity of global photovoltaics in 2023 is 411 GW. It is expected that PV installed capacity will continue to grow in 2024. Solder tape is an important auxiliary material for photovoltaic modules. The steady increase in PV installed capacity will help the company to stabilize the volume of shipments and ensure that the company's performance is maintained over a long period of time.
Production capacity has been steadily implemented, and new product iterations are expected to optimize the company's profit structure. The company's production capacity continues to expand, and the production project with an annual output of 20,000 tons of photovoltaic welding belts has been steadily implemented according to the plan, supporting the company to further expand its market share. With the smooth introduction of 0BB technology into the production line, less silver has become a trend in the current market. Compared with traditional welding belts, 0BB welding belts have more profit margin. The company's 0BB welding belt development is progressing smoothly, and the products have been supplied to some downstream customers. With the gradual implementation of 0BB technology, the growing industry demand for 0BB welding belts is expected to gradually improve the company's profitability. At the same time, as the technical and R&D capacity requirements of related manufacturers continue to rise from product iteration to 0BB welding belt, the concentration of the photovoltaic welding belt market is expected to increase in the future, and the company's R&D strength advantage will help the company further increase its market share.
Investment advice: We expect the company to achieve revenue of 36.82/46.17/5.452 billion yuan in 2024-2026, net profit to mother of 2.16/2.272/328 million yuan respectively, EPS 2.07/2.61/3.15 yuan, and PE 17/13/11 times, maintaining the “recommended rating”.
Risk warning: Market competition intensifies; market demand falls short of expectations; risk of economic fluctuations.