The decline in industrial chain prices stimulates demand. TopCon became the mainstream of the industry. Prices in the PV industry chain have declined since 2023, entering the bottom range. Downstream PV installation costs have dropped sharply, stimulating installed demand. According to data from the International Energy Agency (IEA), the world's new PV installed capacity reached 420 GW in 2023, +85% year over year; according to statistics from the National Energy Administration, China's PV installed capacity reached 216.88 GW in 2023, +148.12% over the same period last year. The iteration process of battery technology has accelerated, the conversion efficiency of RT type batteries is approaching the limit and profit space is compressed, production capacity of N-type batteries has been released, and market share has increased rapidly. TopCon batteries have become mainstream in the market. According to CPIA data, China's battery production in 2023 was 545 GW, +64.9% year-on-year. It is estimated that in 2024, cell production will exceed 820 GW. InfoLink expects N-type technology to reach a market share of nearly 79% in 2024, with shipments as high as 492 GW. Among them, TopCon battery market share will rapidly increase to about 70%, and the estimated shipment volume will reach about 435 GW.
The company's performance was high in 2023. The company, the number one in the N-type battery shipment industry, achieved revenue of 18.657 billion yuan, +60.90% year over year; net profit to mother of 816 million yuan, +13.77% year over year; deducted non-net profit of 559 million yuan, +13.34% year over year. The main reason for the increase in performance is the rapid increase in the company's battery shipments. In 2023, the company's battery product shipments reached 29.96 GW, +179.48% year-on-year, including 9.38 GW for P type and 20.58 GW for type N. According to Infolink statistics, in 2023, the company ranked fourth in the world in battery shipments and number one in the world in N-type battery shipments. With the increase in battery shipments, the company's battery business revenue reached 18.631 billion yuan in 2023, +67.82% year over year; the gross profit margin of the battery business was 14.69%, up 3.31 pct year on year.
Concentrate the development of N-type technology, and increase the depreciation value of R-type assets
The photovoltaic industry landscape has ushered in major changes, and the market share of N-type batteries has increased rapidly. In order to keep up with the pace of technological iteration in the industry, the company prepared 894 million yuan to reduce the impairment value of PERC battery-related assets in the fourth quarter of 2023. By clearing the R type asset equipment, the company optimized the production capacity structure, and launched it lightly to further increase the concentration of N-type battery technology. In terms of production capacity, in 2023, with the company's Chuzhou and Huai'an bases being built and put into operation one after another, the production capacity of N-type Topcon batteries reached about 40 gW. In terms of products, the company introduced a number of cutting-edge technologies, continuously optimized and upgraded TopCon battery series products, and is committed to continuously improving product mass production efficiency. In 2023, the company's TopCon battery mass production efficiency reached 26%, and the company aims to increase the average mass production efficiency of TopCon batteries by more than 0.5% in 2024. The company further reduces non-silicon costs and enhances the market competitiveness of TopCon products through methods such as reducing the amount of silver paste, optimizing graphics, and improving printing technology. The company actively promotes the industrial mass production of N-type Topcon BC batteries, and also lays out cutting-edge technologies such as perovskite lamination.
Plan a Hong Kong stock listing and lay out overseas production capacity
According to data from the General Administration of Customs, China's exports of silicon wafers, cells and modules in 2023 were 70.3/39.3/211.7 GW, respectively, +93.69%/65.5%/37.9%, respectively; the total export volume of photovoltaic products was US$48.48 billion, or 5.4% year-on-year. The global photovoltaic manufacturing industry is expanding at an accelerated pace, Chinese photovoltaic companies are going overseas at an accelerated pace, and the trend of localized manufacturing is obvious. The company actively targets overseas market needs, completed customer development in Asia, Europe and other regions, and actively completed customer certification in emerging markets such as North America, Latin America, and Australia. Overseas sales accounted for 4.69% in 2023, an increase of 4.40 pcts over the previous year. At the same time, it plans to invest in the construction of photovoltaic cell factories overseas. In order to lay out overseas production capacity, the company has submitted an application for the listing of overseas listed shares (H shares) to the Hong Kong Stock Exchange. The funds raised will be used to build overseas production capacity for high-efficiency batteries, overseas market expansion, overseas sales and operation system construction, global R&D center construction, and supplementary working capital. Currently, there is little production capacity for high-quality photovoltaic cells overseas. The company is leading the global layout strategy and is expected to continue to benefit in the future.
Investment advice and profit forecast: The market share of N-type products continues to increase, the company's TopCon product technology is advanced, and the global layout strategy is leading. The company's net profit from 2024 to 2026 is estimated to be 1,487/16.93/1,817 billion yuan, corresponding to 8/7/7 times PE from 2024 to 2026, giving it a “buy” rating.
Risk warning: The global economy is sluggish, demand for photovoltaic installations is declining; production capacity expansion falls short of expectations; raw material prices fluctuate greatly; the company's production capacity investment falls short of expectations; changes in overseas policies; and trade barriers between Europe and the US prevent industry development.