Key points of investment:
Incident: The company released its 2023 annual report and 2024 quarterly report on April 22, 2024. In 2023, it achieved operating income of 72.251 billion yuan, +79.47% year over year; net profit to mother of 9.404 billion yuan, +162.69% year on year; gross profit margin of 30.36%, +5.81 pct year on year; net profit margin 13.30%, year on year +4.12 pct year on year. The company achieved rapid growth in revenue and profit, exceeding market expectations. 2024Q1 achieved revenue of 12.614 billion yuan, +0.26% year over year; net profit to mother of 2,096 billion yuan, +39.05% year over year, net profit margin 16.7%, +7.9pct month-on-month. Mainly, high-margin photovoltaic products are sustainable, and the share of the high-margin inverter business continues to increase.
The inverter business has seen a high increase in shipments and a marked increase in profitability. The operating revenue of photovoltaic inverters in 2023 was 27.653 billion yuan, +60.97%; the gross profit margin was 37.93%, +5.51pct, mainly due to the company's leading overseas channel network layout and excellent brand power, and the company's overseas shipments grew rapidly; the company's annual shipment volume was 130 GW, +68.83%. The company's high-power string inverters SG320HX and 1+X modular inverters have been widely and thoroughly used in various scenarios around the world. Among them, 1+X modular inverters have already exceeded the total number of global orders for the year. 45 GW 2024Q1 inverters continue to maintain healthy growth.
Energy storage shipments are growing steadily, and profitability continues to increase. In 2023, the revenue of energy storage systems was 17.802 billion yuan, +75.79% year-on-year, and +14.23pct. The main reason was that the company actively laid out the European, American and Australian markets, improved overseas business capabilities, and formed a good brand and channel layout. The global delivery volume was 10.5 GWh, +36.36% year over year, ranking first among Chinese companies for eight consecutive years. 2024Q1 energy storage business development was slightly lower than the same period, mainly due to the low season and delays in revenue recognition for individual projects.
New energy investment and development are actively distributed, and falling raw material prices have led to rapid growth in profitability. In 2023, the power plant investment and development business achieved revenue of 24.734 billion yuan, +113.2% year over year. Mainly due to the accelerated transformation to distributed household use, household PV installed capacity increased 200% year over year. Furthermore, as the price of upstream raw materials declined, gross margin also increased from 11.76% in 2022 to 16.36%, +4.6pct compared to +4.6pct. Profitability improved markedly. 2024Q1 off-season power plants were less developed, and revenue declined slightly year-on-year.
Profit forecast and investment rating: Based on the rapid development of the company's optical storage business and the impact of a slight decline in the overall growth rate of the industry, we adjusted the company's 2024/2025 net profit forecast to be $114.72/12.935 billion yuan (previous value was $118.25/14,179 billion yuan), adding net profit to mother in 2026 of $15.47 billion (stock price on 2024/4/23), corresponding to PE13/11/9X, maintaining a “buy” rating.
Risk warning: PV installations fall short of expectations; increased industry competition; risk of international trade friction, etc.