Incidents:
On April 22, 2024, the company released its 2023 annual report. During the reporting period, the company achieved operating income of 118.682 billion yuan, a year-on-year increase of 43.55%, achieved net profit of 7.440 billion yuan, a year-on-year increase of 153.20%, achieved net profit after deduction of 6.904 billion yuan, an increase of 152.09% over the previous year, and achieved net cash flow from operating activities of 24.816 billion yuan, an increase of 507.62% over the previous year. The company's performance increased significantly and profitability improved significantly.
Among them, the 2023Q4 company achieved operating income of 33.585 billion yuan, an increase of 12.31%/6.71% year-on-year respectively, and realized net profit of 1,086 billion yuan, a year-on-year/ month-on-month decrease of 13.97%/56.75%, mainly affected by increased competition in the industry, and the company's profit space was squeezed.
Benefiting from the N-type first-mover advantage, the annual profitability increased significantly. During the reporting period, the company achieved a gross sales margin of 14.04%, a year-on-year increase of 3.59pct, a year-on-year increase of 6.27%, and a year-on-year increase of 2.72pct. The PV module business, as the main source of revenue for the company, achieved revenue of 114.383 billion yuan, a gross profit margin of 14.43%, and a year-on-year increase of 3.82 pct. According to According to Infolink Consulting's statistics, in 2023, the company's component shipments rank first in the industry. The company's component shipments are expected to reach 100-110GW in 2024, with N-type accounting for nearly 90%.
The N-type integrated layout is improving, and the efficiency level continues to break through in terms of production capacity. By the end of 2023, the company's silicon/cell/module production capacity reached 85/90/110GW, respectively, and the integrated production capacity support rate reached more than 85%. By the end of 2024, it is expected to reach 120/110/130GW respectively, of which the N-type production capacity exceeds 100 GW. In terms of efficiency, by the end of 2023, the company's TopCon battery R&D had a maximum efficiency of 26.89%, an average mass production efficiency of over 25.8%, and a maximum R&D efficiency of 32.33% for perovskite laminated batteries based on TopCon substrates; the average efficiency of mass production of 2024Q1 has exceeded 26% and is expected to reach 26.5% by the end of 2024, helping the company further reduce cost levels and improve product competitiveness.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2024-2026 to be 1065.0/1167.2/131.35 billion yuan, respectively, with year-on-year growth rates of -10.3%/9.6%/12.5%, net profit to mother of 61.5/68.2/8.03 billion yuan, year-on-year growth rates of -17.3%/10.9%/17.7%, EPS of 0.61/0.68/0.80 yuan/share, respectively, and a 3-year CAGR of 2.58%. As a leading enterprise in the N-type TopCon industry, the company's first-mover advantage in technology and scale is expected to consolidate its leading position and maintain its comparative competitive advantage during the intensification of industry competition. Referring to comparable company valuations, we will give the company 15 times PE in 2024, with a target price of 9.22 yuan, and maintain a “buy” rating.
Risk warning: PV installation scale falls short of expectations; raw material prices fluctuate greatly; overseas policy changes.