Brief performance review
On April 22, the company released its 2023 annual report. It achieved full-year revenue of 118.7 billion yuan, an increase of 44%; realized net profit of 7.404 billion yuan, an increase of 153%; and realized net profit of 6.904 billion yuan without return to mother, an increase of 161%. Among them, Q4 achieved net profit of 1,086 million yuan, a decrease of 14% and a decrease of 57%; net profit deducted from non-return to mother was 857 million yuan, a decrease of 24% and a 66% drop. The results were close to the median forecast and were in line with expectations.
TopCon's product advantages support shipments to return to the top of the list, and shipments are expected to maintain a high increase in 2024. In 2023, the company's total shipments were 86.56 GW (78.52 GW of module shipments), with a year-on-year increase of 77%, ranking first in the industry in module shipments; among them, Q4 module shipments were 26.3 GW, an increase of 23% over the previous month, and continued to maintain a high growth rate, mainly driven by the volume of new TopCon production capacity.
In 2023, the company shipped 48.41 GW of N-type modules, of which Q4 shipped 18.6 GW, increasing its share to 71% in a single quarter. Against the backdrop of large price fluctuations in the industrial chain and wait-and-see terminal demand, the company maintained rapid shipment growth with TopCon product advantages. At the end of 2023, the company had an advanced TopCon battery production capacity of 70 GW. With the first and second phase of the project under construction, the N-type superpower is expected to exceed 100GW by the end of 2024, driving the company to achieve the annual shipment target of 100-110GW (N-type shipments account for nearly 90%).
Against the backdrop of pressure on profits in the industrial chain, TopCon's efficiency and cost advantages have consolidated its leading position. Prices in the Q4 industrial chain fell rapidly, and the company's gross sales margin fell to 9.66%. The company's Q4 integrated unit profit was estimated at 0.03-0.04 yuan/W. The company continues to promote N-type cost reduction and efficiency. In 2023, the average non-silicon cost in crystallization and slicing decreased by 15.41% year-on-year, the average efficiency of mass production of N-type batteries exceeded 25.8% at the end of 2023, the average efficiency of mass production of 2024Q1 has already exceeded 26%, and the average mass production efficiency is expected to increase to 26.5% by the end of 2024. Considering the efficiency and power advantages of TopCon components, and the cost optimization space brought about by subsequent technological advances, as TopCon's shipment share continues to increase, the company is expected to maintain the profit gap and consolidate its leading position with TopCon products and technical advantages in the context of pressure on the industrial chain.
Actively improve the supply chain layout and enhance global competitiveness. The company continues to expand the global integrated supply chain, including factories in Southeast Asia. By the end of 2023, it had the industry's largest overseas integrated production capacity of more than 12 GW of silicon wafers, batteries and modules, and is actively promoting the construction of US 1GW module production capacity. The share of US high-profit market shipments is expected to further increase in 2024, supporting the company's component profitability to maintain an industry-leading level.
According to our latest forecast on industrial chain prices, the company's net profit forecast for 24-25 was lowered to 48 (-49%) and 65 (-46%) billion yuan, and the 2026 forecast was added to 8.3 billion yuan. The PE corresponding to the current stock price is 16/12/9 times, respectively, maintaining the “buy” rating.
Risk warning
The international trade environment deteriorated; progress in new technology fell short of expectations; and the RMB exchange rate fluctuated.