Incident: Recently, the company disclosed its 2023 annual report. In 2023, the company achieved revenue of 9.540 billion yuan, an increase of 3.29% over the previous year, and realized net profit of 1,579 billion yuan, an increase of 13.75% over the previous year.
Comment:
The company achieved a rapid increase in net profit due to: (1) the increase in the installed scale of the company's power plants, the company strengthened operation and maintenance management, and the year-on-year increase in power generation; (2) the company strengthened capital management by issuing low-cost green corporate bonds and reducing interest rates on stock loans, etc., and financial expenses declined year-on-year.
The company issues green corporate bonds at better prices. In 2023, the company successfully issued “carbon neutrality” + “scientific and technological innovation” double labeled green corporate bonds with a scale of 1 billion yuan and obtained a good issuance price. Among them, the issuance scale of Type 1 was 200 million yuan, the coupon interest rate was 2.50%, and the term was 2 years; the issuance scale of Type 2 was 800 million yuan, the coupon interest rate was 3.13%, and the term was 5 years. This time, the company reduced financing costs by introducing “technological innovation” and “carbon neutrality” certification labels.
The company plans to issue convertible bonds to raise funds to upgrade the installed capacity. Currently, the company plans to issue convertible bonds and plans to raise no more than 2.95 billion yuan, all of which will be used for the construction of photovoltaic power plant projects. The application for the issuance of this convertible bond was officially accepted by the Shenzhen Stock Exchange in August 2023, and two rounds of review and response to the inquiry letter have been completed. If the convertible bonds are successfully issued this time, they will provide a financial guarantee for the company's development and help the company increase the installed capacity of photovoltaic power plants. In addition, the fund-raising project covers various forms of photovoltaic power plants such as “photovoltaic+energy storage”, fishery and light complementary, agricultural photovoltaics, etc., which helps to enrich the company's industrial layout in the field of photovoltaic power plants.
The company attaches importance to R&D and introduction of new technologies. In 2021-2023, the company's R&D investment increased from 117 million yuan to 273 million yuan, with a CAGR of 52.63%; in 2023, the company's R&D investment increased to 2.87% of revenue. The company actively carries out research and development of new technologies, new processes, and new products in crystalline silicon solar cells, photovoltaic modules, intelligent operation and maintenance equipment, and digital informatization, focusing on actual needs such as digital informatization applications, improved efficiency of crystalline silicon solar cells and modules, reduction of electricity costs in photovoltaic power plants, and recycling of decommissioned components. In addition, the company is focusing on introducing new technology and processes, installing photovoltaic module deflectors on distributed projects, fully introducing pre-galvanized aluminum-magnesium bracket technology in new construction projects, promoting the application of high-power N-type modules, and completing the application of flexible photovoltaic brackets in new construction projects to help reduce costs and increase efficiency.
Investment advice: The company's EPS is expected to be 0.44 yuan, 0.48 yuan, and 0.48 yuan respectively in 2024-2026, corresponding PE is 12 times, 11 times, and 11 times, respectively, maintaining the company's “buy” rating.
Risk warning: Policy progress falls short of expectations; economic development falls short of expectations; risk of feed-in tariff fluctuations; risk of fluctuations in raw material prices, etc.