Description of the event
The company released its 2023 annual report, achieving revenue of 8.733 billion yuan, +45.43% year over year; realized net profit of 1,634 billion yuan, +56.04% year over year; realized net profit without return to mother of 1,525 billion yuan, +57.03% year over year. Based on this calculation, in 2023Q4, the company achieved revenue of 2,328 million yuan, +33.15% year over year; realized net profit of 411 million yuan, +81.77% year over year; realized net profit of 396 million yuan without return to mother, +89.37% year over year.
Incident comments
Benefiting from abundant orders in the early stages, the company's annual report performance increased significantly, and the growth rate increased compared to 2022. Benefiting from the continuous increase in revenue share of equipment such as TopCon, the company's gross margin increased steadily in 2023Q1-Q4, and the overall gross margin reached 28.95% in 2023, +3.51 pct year on year. The company continued to increase R&D investment, with R&D expenses of 467 million yuan, +63.46% year on year; in addition, after-sales maintenance costs and sales commissions increased rapidly. The company's sales expenses ratio (+0.80pct year on year) and R&D expenses rate (+0.59pct year on year) increased. The overall net margin reached 18.77%, +1.34pct year on year, and profitability performance improved. In '23, the company's inventory and contract liabilities reached 21.282 billion (of which 87.42% of products were issued), 18.111 billion, compared with +201.1% and 211.6% over the same period, which fully reflects the rapid expansion of the company's new and on-hand orders. In particular, the proportion of products issued in inventory is relatively high. The reaction is that there are still many devices awaiting inspection, which is expected to support the company's performance growth.
The main PV industry performed well in 2023, and its market position and core competitiveness continued to maintain its leading position. TopCon's PEpoly efficiency and yield continued to improve, and its market share increased steadily. 2023 was a big year for TopCon to expand production, contributing significantly to the company's orders. HJT Route made a breakthrough in the plate PECVD radio frequency (RF) microcrystal P high-speed high-crystallization rate deposition process, reducing 1-2 microcrystalline P cavities compared to mainstream equipment on the market, helping the industry reduce costs further. The average efficiency of 12BB heterojunction batteries based on double-sided microcrystals reached 25.1%, and the battery yield stabilized at over 98%. At present, the company has won the bid for the entire mass-produced HJT line from the world's leading photovoltaic companies. The power of mass-produced double glass modules is at the advanced level of the industry.
On the perovskite and perovskite lamination route, the company already has the ability to develop and supply MW grade mass production line equipment for perovskite and perovskite lamination, and has provided perovskite equipment and services to more than 10 leading photovoltaic companies and industry start-ups and research institutes. In 2023, the company's 5-in-1 clustered perovskite laminated vacuum coating equipment was successfully launched, and the core process equipment layout was comprehensive.
The semiconductor business is progressing steadily, and special equipment for lithium battery vacuum is expected to contribute to incremental performance. The company's 4 to 12 inch slot and single wafer etching and cleaning wet process equipment can meet the wet process requirements for third-generation semiconductors, microelectromechanical, back-end packaging, integrated circuit IDM, and wafer foundry, and the application field continues to expand and orders increase. At the same time, the company broke through six core technologies, including process furnace chamber design and manufacturing technology, successfully developed silicon carbide high temperature heat treatment equipment, and successfully shipped it to a leading domestic semiconductor IDM company after pre-inspection, laying a solid foundation for the company to expand the third-generation semiconductor equipment business. In addition, the company's self-developed lithium battery vacuum equipment and double-sided copper foil sputtering coating equipment successfully went offline, proposed a copper foil solution for the entire composite fluid collector line, and gradually opened up development and application in the new energy lithium battery industry.
Maintain a “buy” rating. The company has plenty of orders in hand, and the combined platform-based business is progressing steadily. The company is expected to achieve net profit of 3.123 billion yuan and 3.814 billion yuan in 2024-2025, corresponding PE of 6x and 5x respectively.
Risk warning
1. The expansion of N-type battery production falls short of expectations;
2. The risk of increased market competition.