Core views

Benefiting from HJT's continuous confirmation of revenue from full-line equipment orders, revenue in 2023 and 2024Q1 both achieved a year-on-year increase of more than 90%. Gross margin fell 7.79pct year-on-year in 2023, mainly due to the large decline in gross margin of screen printing equipment due to customer demand for cost reduction and increased competition in the industry, and HJT equipment was affected by production line transformation in the early stages and manufacturing had no large-scale effect, so there was no effective support for increasing the company's overall gross margin. As the share of HJT equipment revenue increased, 2024Q1's gross margin increased by 3.88pct to 30.93% month-on-month, and profit margins improved marginally. The HJT industry's “three reduction and one increase” cost reduction and efficiency plan continues to advance. As a leader in HJT line equipment, the company actively leads the technological development of the industry and continues to launch new equipment to help the industry progress. At the same time, the company relies on core technical experience to continue to expand the field of display panel equipment and semiconductor packaging equipment, and the future of platform-based development can be expected.

occurrences

The company released its 2023 annual report, which achieved annual revenue of 8.089 billion yuan, a year-on-year increase of 94.99%, and net profit of 914 million yuan, an increase of 6.03% over the previous year; of these, the fourth quarter achieved operating income of 2,982 billion yuan, an increase of 163.23% over the previous year, and net profit to mother of 200 million yuan, an increase of 14.46% over the previous year.

At the same time, the company released its report for the first quarter of 2024. Q1 achieved revenue of 2,218 billion yuan, an increase of 91.80% over the previous year, and net profit to mother of 260 million yuan, an increase of 17.79% over the previous year.

Brief review

HJT full-line equipment sales drive rapid revenue growth. Q1 Marginal Profitability Improvement Company is a leading supplier of photovoltaic cell screen printing equipment and HJT line equipment. In recent years, HJT equipment orders have grown rapidly, gradually achieving revenue recognition, and accelerated revenue growth. Both for the full year of 2023 and 2024Q1, the revenue side achieved a year-on-year growth rate of more than 90%, and the business scale expanded rapidly.

On the profit side, the company's gross profit margin in 2023 was 30.51%, down 7.79pct year-on-year, mainly due to: ① the gross margin of the company's screen printing equipment declined significantly due to factors such as continued demand from downstream customers for cost reduction, increased industry competition, and phased overflow; ② heterogeneous line equipment confirmed revenue one after another, but due to early production line transformation and manufacturing had no large-scale effect, there was no effective support for increasing the company's overall gross margin. 2024Q1's gross margin was 30.93%, up 3.88pct from Q4, mainly due to the increase in HJT equipment revenue share. In the future, as the maturity of HJT equipment increases and the scale effect gradually becomes apparent, the company's gross margin is expected to rise steadily.

From an order perspective, the company's contract liabilities at the end of 2023 and at the end of 2024Q1 were 8.455 billion yuan and 8.890 billion yuan respectively, a significant increase from 4.307 billion yuan at the end of 2022, showing that the company is full of orders on hand, providing support for future growth.

The “three reduction and one increase” cost reduction and efficiency plan for the HJT industry chain continues to advance, the company's “three reduction and one increase” plan to accelerate the platform-based layout in the pan-semiconductor sector continues to advance, and the company's new process equipment helps the development of the HJT industry. To meet the needs of the photovoltaic industry to continuously reduce costs and increase efficiency, the HJT related industry chain proposed “three reduction and one increase” comprehensive cost reduction and efficiency solutions, namely “silver reduction: silver reduction: silver coating solution”, “grid reduction: 0BB process solution”, “silicon reduction: silicon wafer thinning”, and “one increase: UV light to increase film efficiency and longevity”. This is not only a core trend in the development of HJT battery technology, but also an inevitable path for HJT battery technology to strengthen market competitiveness and increase penetration rate under fierce market competition. The company successfully upgraded mass production equipment for high-efficiency microcrystalline heterojunction batteries, greatly improving the photoelectric conversion efficiency of heterojunction batteries; in addition, the company developed the second-generation fence-free technology NBB and its string welding equipment. This technology removes all main grid wires from the battery, reduces silver paste consumption by more than 30%, and forms an effective welding alloy layer during the welding process, which improves component power and reliability while reducing manufacturing costs. At the same time, the company actively promotes the industrialization of technologies such as pre-welding 0BB, steel screen printing, and silver coated copper, forming a competitive advantage in HJT battery metallization and further promoting HJT's cost reduction and efficiency process.

Based on its core technical experience, the company actively expands new fields and accelerates the layout of core equipment for display panels and semiconductor packaging. As a leading screen printing equipment company, the company has accumulated rich experience in R&D and manufacturing of high-end equipment. Other high-end equipment fields it is focusing on expanding are similar in terms of supply chain, service system, and production quality control, and the technology and experience are highly replicable. The company has accumulated and expanded the display panel equipment and semiconductor packaging equipment market with its own laser technology. It has independently developed a full set of equipment such as wafer cutting, splitting, and laser bonding for Mini LED. It has independently developed a full set of equipment such as wafer bonding, laser peeling, laser giant rotation, laser bonding and repair for Micro LED, and has pioneered the localization of semiconductor wafer grinding equipment such as laser slotting, laser modification cutting, knife wheel cutting, grinding and polishing integrated equipment. With excellent product performance, the company's display panel-related products have been used by well-known companies in the BOE, Shentianma, Vicino and other industries, and semiconductor packaging-related products have been successfully introduced into mainstream domestic packaging and testing manufacturers such as Changdian Technology, Huatian Technology, and San'an Optoelectronics.

Investment advice: As a leader in HJT complete line equipment+screen printing equipment, the company will significantly benefit from the development of the photovoltaic industry. Outside the field of photovoltaics, the company is based on core technologies of lasers, printing and vacuum, and is expected to continue to expand horizontally and vertically in the pan-semiconductor field, opening up room for long-term growth. The company's revenue for 2024-2026 is expected to be 131.69, 16.507, and 20.042 billion yuan, respectively, up 62.82%, 25.34%, and 22.03% year-on-year; net profit to mother will be 15.18, 20.51, and 2,610 billion yuan, respectively, up 66.11%, 35.14%, and 27.22% year-on-year respectively. Corresponding PE is 19.69, 14.57, and 11.45 times, respectively, maintaining the “buy” rating.

Risk analysis

① The risk that downstream heterojunction battery production expansion falls short of expectations: The full industrialization of heterojunction battery technology still depends on further cost reduction and efficiency in the industrial chain.

If the heterojunction cost reduction and efficiency process falls short of expectations, it will cause heterojunction battery technology to face the risk of not being able to obtain the efficiency advantages and cost advantages required for industrialization. The pace of downstream production expansion may slow down as a result, which will have an impact on the company's operations and future development.

② Risk of fluctuations in business performance due to long inspection cycles: The company's main business product, solar cell production equipment, has characteristics such as high unit price, complicated installation and commissioning, and long inspection cycle. The company needs to wait for the client's product to be inspected before confirming revenue, and the acceptance conditions may be affected by factors such as the progress of the customer's new construction project, the overall line adjustment, and the customer's technical process improvement, and there is some uncertainty.