2023 and 1Q24 results fall short of market expectations
The company announced 2023 and 1Q24 results: revenue of 8.09 billion yuan in 2023, +95.0% year on year, net profit of 90,000,000 yuan, +6.0% year on year; 4Q23 revenue of 2.98 billion yuan, +163.2% year on year, net profit of 200 million yuan, +14.5% year on year. 1Q24's revenue was 2.22 billion yuan, +91.8% year on year, and net profit to mother was 260 million yuan, +17.8% year over year. The profit side was lower than market expectations. We believe it was mainly due to downstream customer demand for continued cost reduction and increased competition in the PV market.
Revenue growth was strong, and gross margin declined due to increased competition in the PV market. By product, the annual revenue of complete equipment/single equipment/accessories and others in 23 years was 71.0/6.4/350 million yuan, up 113.1%/30.7%/6.6% year on year; the gross profit margin was 30.3%/32.1%/31.8%, which decreased by 5.7pp/8.3pp/26.8ppt, respectively. The main reason was that the gross margin of screen printing line equipment declined significantly. At the same time, the gross margin of HJT complete line equipment was gradually increased, but the gross margin was relatively low. 1Q24 gross profit margin was 30.94%, YoY -3.1 ppt, month-on-month +3.9ppt; net profit margin was 11.73%, -7.4ppt, YoY +5.0ppt, 1Q24 profitability rebounded month-on-month.
Inventories and contract liabilities have increased significantly, and HJT is expected to have plenty of orders in hand. By the end of '23, the company's contractual liabilities were 8.455 billion yuan, +96.4% year over year; inventory was 10.781 billion yuan, +102.1% year over year, of which 7.277 billion yuan was issued, +165.5% year over year. We believe this is expected to support subsequent sales revenue growth. According to the company's announcement, the company tendered about 50 GW of HJT equipment in '23, and has signed orders such as 8.4 GW from Anhui Huasheng, 4.8 GW from Reliance Industries, and 4.8 GW of King Kong Glass, etc., which account for a large share of HJT equipment tenders. We believe it is expected to support high performance growth in the future.
Development trends
Actively lay out the fields of display panel equipment and semiconductor packaging equipment. 1) HJT battery equipment: Lay out the field of HJT solar cell technology, independently develop PECVD and PVD equipment, develop second-generation fence-less technology NBB and its string welding equipment to reduce costs and increase efficiency. 2) Pan-semiconductors: In 23 years, the company's display panel products have been used by companies such as BOE and Shentianma. Semiconductor packaging products have been successfully introduced to packaging and testing manufacturers such as San'an Optoelectronics and Changdian Technology, and research and development of new products such as Micro LED equipment has begun.
Profit forecasting and valuation
Considering the decline in screen printing gross margin, we lowered our 2024 profit forecast by 20.8% to 1,515 billion yuan, and introduced a profit forecast of 2,297 billion yuan for 2025. The current stock price corresponding to 2024/2025 P/E is 19.5x/12.9x, respectively. Due to increased competition in the industry, we lowered our target price by 22.5% to 132.98 yuan, corresponding to the 2024/25 target P/E of 24.5x/16.2x, a potential increase of 25.40%. We are optimistic that the company's equipment order volume will bring room for growth and maintain the industry's rating.
risks
HJT technology risk, equipment price decline risk, inventory impairment risk, cash flow repayment risk.