Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved operating income of 8.089 billion yuan, a year-on-year increase of 94.99%, and realized net profit of 914 million yuan, an increase of 6.03% over the previous year, and a cash dividend of 11 yuan (tax included) for every 10 shares; 2024Q1 achieved operating income of 2,218 billion yuan, an increase of 91.80% year on year, and achieved net profit of 260 million yuan year on year, up 29.85% month on month.
Operating income remained high, and gross margin declined due to factors such as downstream cost reduction and increased competition. In 2023, the company achieved sales of 16,500 solar equipment, up 55.49% year on year, driving the PV industry's revenue to increase 96.84% year on year to 8.051 billion yuan; however, due to factors such as downstream customer demand for cost reduction and increased industry competition, the company's overall gross margin fell 7.79 pcts to 30.51% in 2023.
2024Q1, gross margin and net margin both improved month-on-month, as the company's revenue continued to grow rapidly, increasing 3.88/3.93 pcts to 30.93%/10.84%, respectively, as the company's revenue continued to grow rapidly. As of the end of 2024Q1, the company's contract debt/inventory size was 8890/11.097 billion yuan respectively, up 63.58%/66.64% from the end of 2023Q1, respectively, and on-hand orders remained relatively abundant.
The HJT industry is progressing in an orderly manner, and the company has successfully confirmed HJT battery line equipment order revenue. In 2023, the Huasheng Xuancheng Phase III 2.4GW double-sided microcrystalline heterojunction battery project, the fourth phase 3GW double-sided microcrystalline heterojunction battery project, King Kong Photovoltaic (Jiuquan base) 4.8GW high-efficiency heterojunction cells, and the Meishan Liansheng 8GW HJT double-sided microcrystalline project completed the first film offline. The conversion efficiency all exceeded 25.0%, marking HJT's official entry into the double-sided microcrystalline era. The company's self-developed “HJT2.0 heterojunction battery PECVD mass production equipment” was first installed by the National Energy Administration, and successfully upgraded the high-efficiency microcrystalline heterojunction battery production equipment. In 2023, the company has confirmed the order revenue for HJT battery line equipment. Following the gradual approval of projects such as Anhui Huasheng, King Kong Photovoltaic, and Reliance Industries in India, HJT complete line equipment is expected to become a new performance growth point for the company.
R&D investment remains high, and breakthroughs continue to be made in display panels and semiconductor packaging equipment. The company has always attached importance to R&D innovation, and R&D investment increased 56.25% year-on-year to 763 million yuan in 2023. While actively researching next-generation solar cell technologies such as HJT and perovskite, the company has expanded its layout in the field of display panels and semiconductor packaging equipment. The self-developed Micro LED core process equipment — massive transfer equipment — has successfully supplied Tianma New Display Research Institute. Various semiconductor devices have been delivered to customers such as Changdian Technology, Huatian Technology, and San'an Optoelectronics and achieved stable mass production, which is expected to contribute to new performance increases in the future.
Maintaining a “buy” rating: The efficiency and cost reduction of heterogeneous routes continues to advance, and the company's orders and performance are expected to be released at an accelerated pace. However, due to increased competition in the industry, the profitability of screen printing equipment has declined, and the combined expenses have increased. We predict the company's net profit of 15.24/20.52 billion yuan for 24-26 (27% down/ 33% down/increase). The current stock price is 19 times PE in 24 years. The company actively lays out to cultivate the HJT technology ecosystem and achieve breakthroughs. In the future, it will continue to benefit from a new round of battery capacity innovation. We are optimistic about the company's future development prospects and continuous improvement in performance, and maintain a “buy” rating.
Risk warning: the risk of a decline in the prosperity of the photovoltaic industry; the risk of a decline in market share due to increased competition in the industry; there is uncertainty about the technical route of HJT's high-efficiency battery equipment.