The company released the 2023 annual report and the 2024 quarterly report. The profit ratio was +51%/-4%. In 2023, the company's welding belt sales grew rapidly, investing in new product development to consolidate its continuous competitiveness. Maintain an increase in holdings rating.
Key points to support ratings
The company's performance in 2023 increased 50.69% year on year: the company released its 2023 annual report and achieved annual revenue of 2,762 billion yuan, up 37.36% year on year; realized profit of 151 million yuan, up 50.69% year on year; realized deduction of 141 million yuan for nonprofit, an increase of 47.45% year on year. According to the annual report data, the 2023Q4 company achieved a profit of 34 million yuan, an increase of 35.45% year on year and a decrease of 24.75% month on month. In 2023Q4, the company achieved a non-profit deduction of 27 million yuan, an increase of 19.7% year on year and a decrease of 38.59% month on month.
2024Q1's profit decreased 4% year on year, and gross operating margin declined: the company also released its 2024 quarterly report. The first quarter achieved revenue of 700 million yuan, an increase of 26.19% year over year and a decrease of 2.28% month on month; realized profit of 35 million yuan, a decrease of 4.18% year on year, up 2.80% month on month; after deducting nonprofit of 0.29 million yuan, a decrease of 15.30% year on year and an increase of 6.54% month on month. In terms of profitability, the company's 24Q1 operating gross margin declined. The 24Q1 company achieved a comprehensive gross profit margin of 7.85%, a year-on-year decrease of 5.21 percentage points, an increase of 0.6 percentage points over the previous year, and a comprehensive net interest rate of 4.95%, a year-on-year decrease of 1.57 percentage points, and an increase of 0.24 percentage points over the previous year.
High growth in welding belt sales: In 2023, the company achieved sales of 33,300 tons of welding tape, an increase of 47.83% over the previous year.
By product, interconnected welding belts achieved revenue of 2,216 billion yuan, a year-on-year increase of 44.06%, and a gross profit margin of 10.07%, an increase of 0.31 percentage points; convergence welding belts achieved revenue of 512 million yuan, an increase of 12.98%, and a gross profit margin of 11.20%, a year-on-year decrease of 1.40 percentage points.
Continued research and development of new products strengthens the company's continued competitiveness: the company actively invests in R&D in line with industry needs. In order to reduce the amount of silver paste used in HJT batteries, the company promoted research and development of “high-efficiency composite 0BB ultrafine wire for HJT” and “novel conductive structures for photovoltaic cell interconnections” to maintain the company's leading position in new technology. Furthermore, the company is still developing product categories, promoting “development and application of high-precision rolled copper foil” and “development of targeted reflective optical films”, injecting new vitality into the company.
valuations
Combined with PV module terminal demand, unit welding belt usage, and phased profit pressure per welding belt, we adjusted the company's 2024-2026 forecast earnings per share to 1.95/3.01/3.85 yuan (the original 2024-2026 forecast was 3.12/3.94/-yuan), corresponding to a price-earnings ratio of 17.9/11.6/9.1 times; maintaining an increase in holdings rating.
The main risks faced by ratings
Price competition exceeded expectations; raw material prices fluctuated unfavorable; downstream demand fell short of expectations; PV policies fell short of expectations; and new product verification progress fell short of expectations.