TCL Central released its 2023 Annual Report and 2024 Quarterly Report. In 2023, the company achieved total revenue of 59.1 billion yuan, a year-on-year decrease of 11.74%; realized net profit to mother of 3.416 billion yuan, a year-on-year decrease of 49.90%; gross sales margin of 20.25%, +2.06 pcts year on year, and a net sales margin of 6.59%, -3.58 pct year on year. Among them, 23Q4 achieved revenue of 10.492 billion yuan, or -38.87%/-23.73% YoY; realized net profit to mother of 2.772 billion yuan, -252.48%/-267.84% YoY. 24Q1 achieved total operating revenue of 99.33 billion yuan, -43.62%/-5.33% YoY; realized net profit to mother of 880 million yuan, -139.05%/-68.26% YoY.
Continue to advance technological breakthroughs and lead the industry at full cost. The company's per capita labor productivity for crystals and chips was 25 MW/person/year and 27 MW/person/year, respectively, leading 71% and 98% compared to the second best in the industry; N-type products achieved a single monthly production lead of about 11.6%, and the number of pieces produced per kilogram was about 1.9. The company is leading the industry at full cost, and the second-best advantage is about 0.03 yuan/W.
Adhere to “green manufacturing” and “green” two-wheel drive. In 2023, TCL's central crystal electricity intensity is 16.7 degrees per kilogram, leading the industry's leading level by 29%; the water intake intensity is 0.028 tons/kg, leading the industry's leading level of 7%. The wafer's electrical strength is 74,000 degrees per million pieces, leading the industry's leading level of 7%; the water intake intensity is 458 tons/million pieces, leading the industry's leading level by 47%.
Asset impairment and fair value change losses have a negative impact on performance. Affected by the rapid decline in PV product prices in Europe and the US, the adjustment of PV subsidy policies, the high interest rate environment, and the slow transformation of the company's own operations, the participating company Maxeon's performance and stock price fell sharply during the reporting period. In response to this, related long-term equity investments and financial assets confirmed losses of 1.01 billion yuan and 400 million yuan in asset impairment and fair value changes, respectively, which had a significant negative impact on the company's performance.
Investment advice: We expect the company's net profit to be 25.21/38.67/4.204 billion yuan in 24-26, or -26.2%/53.4%/8.7%, corresponding EPS of 0.62/0.96/1.04 yuan, respectively. Considering that the cycle is currently at the bottom, the price is expected to rebound in 25 years, maintaining a “buy” rating.
Risk warning: PV industry growth rate declines; geopolitical risks increase; industry competition intensifies