The 23-year performance grew rapidly, and the financial performance was steady. In '23, the company achieved operating income of 118.682 billion yuan, a year-on-year increase of 43.55%, and net profit to mother of 7.404 billion yuan, an increase of 153.20% year-on-year, after deducting non-net profit of 6.904 billion yuan, an increase of 152.09% over the previous year. In 23Q4, operating income was 33.585 billion yuan, up 12.31% year on year, net profit to mother was 1,086 billion yuan, down 13.97% year on year, deducted non-net profit of 857 million yuan, down 24.13% year on year, net cash flow from operating activities reached 13.713 billion yuan, up 8.182 billion yuan month on month, and monetary capital of 27.837 billion yuan, up 39.29% year on year.
The first phase of the Shanxi Grand Base was put into operation in 24Q1, leading in operational efficiency and cost competitiveness. According to the annual report for the year 23, in May 2023, the company announced that it plans to build a large-scale vertical integration base project with an annual output of 56 GW in the Shanxi Comprehensive Reform Zone. The project integrates the three components of silicon wafer, battery, and component integration for the first time in the industry. Through a digital intelligent system, the various production lines are connected, and with the latest production line design solutions such as automated transportation, three-dimensional warehouses, and automated warehousing, it will build an N-type integrated chemical plant with leading production and operation efficiency and cost competitiveness, continuously introduced cutting-edge technology, and meet the requirements of “new quality productivity”. At present, the construction of the project is going smoothly, and the first phase of the 14GW project will gradually be put into operation in March 2024.
N-type shipments are expected to increase in 24, and the overseas market layout is perfect. According to the 23 annual report, the company shipped 78.52 GW of PV modules and 48.41 GW of N-type modules in '23, accounting for about 62%. According to InfoLinkConsulting, the company's module shipments ranked first in the industry. In '24, the company's shipping target is 100-110GW, with N-type shipments accounting for nearly 90%. By the end of '23, the company had the largest overseas integrated production capacity of more than 12 GW of silicon wafers, batteries and modules in the industry. The company actively responds to changes in trade policies in overseas markets, focusing on promoting carbon footprint management, supply chain traceability, ESG, etc., and has made positive progress. While the company has achieved rapid growth in the two major markets of China and Europe, it has also seized opportunities in emerging markets such as the Middle East, Latin America and Southeast Asia, actively responded to changes in US market policy and gradually achieved smooth delivery.
Transformation efficiency continues to improve, and breakthroughs have been made in product development. According to the annual report for the year 23, the average efficiency of mass production of N-type batteries was over 25.8% at the end of 2023. The average mass production efficiency in the first quarter of 2024 already exceeded 26%, and the power of N-type modules was about 30W higher than that of P-type products of the same version. The company's product development efficiency has repeatedly reached new highs. Perovskite laminated batteries based on N-type TopCon have tested and converted 32.33% by the Shanghai Institute of Microsystems and Information Technology of the Chinese Academy of Sciences.
Profit forecast and investment advice: We expect the company's net profit to be 60.12, 71.56, and 8.960 billion yuan respectively for 24-26, up -19.2%, 19.0%, and 25.2% year-on-year, with corresponding EPS of 0.60, 0.72, and 0.90 yuan respectively. Referring to the valuation level of comparable companies, we gave the company a 24-year PE valuation of 15-17 times, with a corresponding reasonable value range of 9.01 to 10.22 yuan, giving it a “superior to the market” rating.
Risk warning: increased competition; declining industry demand; policy risks; technological progress falling short of expectations.