The company's 2023 annual report: Achieved net profit of 217 million yuan for the full year of 2023, +123.3%; 23Q4 achieved net profit of 50 million yuan, +29.9% year-on-year, and -20.1% month-on-month.
The company released its 2024 quarterly report: 24Q1 achieved net profit of 79 million yuan, +122.5% year-on-year and +57.8% month-on-month.
Performance review: (1) There was a month-on-month decline in 23Q4, mainly due to non-operating expenses of $58 million in the fourth quarter (mainly from compensation expenses): (2) 24Q1 increased year-on-year, mainly because the operating side's performance exceeded expectations, and the main environmental protection business development trend was good. The 24Q1 company achieved revenue of 860 million, +49.5% year-on-year, and a gross profit margin of 28.3%, 2.5 pct year-on-year. The expansion of the combined revenue scale led to a decline in the cost ratio.
“Photovoltaic fitting+photovoltaic products” has two wheels of operation, and Huang Xian of the round carbon business has increased flexibility:
Traditional main business, environmental protection equipment business Wei Jianzhen Exhibition: Since the beginning of this year, the company has disclosed that it has won two major related contract orders (consortium bids), with an order value of 3.4-3.85 billion yuan attributable to the company.
The traditional main business has plenty of orders in hand, and subsequent orders are expected to continue to be placed, building a basic market for the company's performance.
TopCon's photovoltaic cell business: In terms of orders, the company and Jinko signed an order for 2.5 billion batteries in March '24. The advantages of binding major customers are prominent, and the order is worry-free. In terms of production capacity, the equipment and process commissioning of the first phase of the project have been completed, and efficiency, yield, and cost have all reached leading levels. At the same time, the company and Jinko are cooperating to build a project with an annual output of 20GW silicon wafers and 20GW batteries in Ziyang. Currently, construction of the first phase of 10GW silicon wafers and 10GW batteries has already started, and the gradual release of production capacity is effectively in line with order fulfillment.
Carbon sequestration business: The company uses non-carbon raw materials such as steel slag to capture flue gas CO2 in situ at low cost to prepare low-carbon cement and high-quality composite ore powder. Affected by the slump in the cement industry in '23, it was under relative pressure. It is expected that subsequent companies will continue to accelerate the implementation of carbon sequestration production lines and develop new carbon sequestration business models, which is expected to contribute flexibility in the future.
Investment advice: The company is based on the main environmental protection equipment business, and TopCon's photovoltaic cell+carbon sequestration business is expected to contribute to bipolar growth. Considering the impact of the sharp drop in prices in the PV industry chain, we revised the company's performance forecast. We expect to achieve net profit of 5.9/9.13 billion yuan in 24-26 (the original forecast value was 11.0/1.52 billion in 24-25), +173%/+67%/+31% year-on-year. The current stock price corresponds to PE 12/7/5 times, respectively, maintaining the “buy” rating.
Risk warning: Industry demand falls short of expectations; Product prices continue to decline; Market competition intensifies; Prices of upstream raw materials fluctuate; Production capacity progress falls short of expectations, etc.