1Q24 results are in line with our expectations
The company announced FY23 and 1Q24 results: in 2023, the company's revenue was 113.39 billion yuan, +33.3% year over year; net profit to mother was 5.53 billion yuan, +50.3% year over year. 1Q24 revenue was $18.26 billion, -14.4% YoY and -43.4% YoY. 1Q24's net profit to mother was $516 million, -70.8% YoY and +13.5% YoY, in line with our expectations. Operating conditions: All year of 2023: The company shipped 65.2 GW of components, +51.3% year on year, distributed shipment 9.6 GW, +54.8% year on year, bracket shipment 9.6 GW, +118.2% year on year, and energy storage shipments were close to 2 GWh. 1Q24: Module shipments exceed 14 GW, with an increase of more than 1 GW, and a profit of 3 points per watt; distributed systems shipped 1.7 GW, received 1 GW, earned 2 gross per watt, and shipped 1.8 GW. We expect a profit of 1-2 points per watt and 400-500 MWh of energy storage, due to R&D and sales expenses.
Development trends
1Q24 revenue was relatively strong, and diversified businesses helped the company move through the cycle. With the average component price falling by more than 50% compared to the same period, the company's 1Q24 revenue was -14%, which is relatively strong. We believe that it mainly contributed to revenue from distributed, bracket, and energy storage businesses; in the case of lower component prices in some domestic and overseas regions, the company's 1Q profit per watt was 3 points, down about 2 points from month to month, reflecting an excellent sales structure. In 2024, the company will guide distributed shipments of +20%, and unit profit is relatively stable; bracket shipments will begin to increase significantly, and shipments in Europe will increase significantly; and energy storage shipments will more than double that of the previous year.
Shipments of guidance components increased by more than 30% year-on-year in 2024, and the US share increased to 10%. The company guides 80-90GW of component shipments in 2024, with China 40% +, Europe 20% +, and North America 10%. The share of high-profit market shipments will increase. We expect the company's profit per unit of profit in the US market to be around 3 gross, which may contribute more than 2 billion yuan in profit for the whole year. The company has an integrated production capacity of 6.5 GW silicon wafer battery modules overseas. The company expects the US to start production of 5GW modules in October '24, providing a production capacity guarantee for US shipments.
TopCon battery production capacity continues to expand, and battery technologies such as HJT/BC are fully deployed. As of 2023, the company's TopCon battery production capacity will exceed 40 GW, leading the cost of the company's TopCon battery by 30 GW in 24. Currently, the non-silicon cost of the company's TopCon battery has been reduced to 0.16 yuan/watt, leading the cost industry. At the same time, the company plans to launch HJT and BC pilot lines in 2024 to maintain active R&D and careful mass production.
Profit forecasting and valuation
We maintain our 2024/2025 net profit forecast of $46.7/6.28 billion. Maintaining an outperforming industry rating, considering the recent decline in sector valuation, the target price was lowered by 12.5% to 28 yuan, corresponding to 13.1/9.7 times P/E in 2024/2025. There is room for 40.4% increase compared to the current stock price. The current stock price corresponds to 9.3/6.9 times P/E in 2024/2025.
risks
PV demand fell short of expectations, US trade policy risks, and the industry's supply and demand pattern deteriorated.