Key points of investment

Platform-based management has achieved outstanding results, and revenue has achieved steady growth

In 2023, the company achieved operating income of 4.166 billion yuan, a year-on-year increase of 1.22%, achieved net profit of 104 million yuan, a year-on-year decrease of 39.50%, achieved a gross profit margin of 10.74%, a year-on-year decrease of 2.30pct, achieved a net profit margin of 2.47%, and a year-on-year decline of 1.68 pct. In 2023, the company's various businesses experienced slight fluctuations over time, achieving steady growth on the overall revenue side, reflecting the effectiveness of the company's innovation and platform-based operation. In the fourth quarter of 2023, the company achieved operating income of 825 million yuan, a year-on-year decrease of 7.73%, achieved net profit of 18 million yuan, an increase of 132.00% over the previous year, achieved a gross profit margin of 11.17%, and achieved a net profit margin of 2.19%.

The diversified business layout achieved remarkable results. Various businesses expanded steadily in 2023. The company adhered to a diversified business layout, and all businesses achieved steady development during the reporting period. 1) Adhesive film: In 2023, the company's photovoltaic film business achieved revenue of 2,441 billion yuan, a year-on-year increase of 15.57%, and achieved sales volume of 267 million square meters (including 26.62 million square meters of optical transfer film), a year-on-year increase of 58.29%, benefiting from the forward-looking layout of the company's adhesive film business and rapid expansion in business scale; 2) Backplane: In 2023, the company's backboard business achieved operating income of 1,177 million yuan, a year-on-year decrease of 21.47%, and achieved a gross profit margin of 15.78% year-on-year increase 0.43pct, the company has diverse backboards, perfect product structure, and maintains a leading position in the industry; 3) In 2023, the company's semiconductor, electrical, and transportation materials business achieved sales volume of 48.2797 million square meters, an increase of 33.06% over the previous year.

Production capacity in Xuancheng, Vietnam is being implemented at an accelerated pace, and large-scale economic efficiency continues to increase in 2023. The company expanded production scale and scale-economy effects through technological transformation. Through technological transformation, the company 1) plans to put into operation overseas Vietnam in mid-2024, with a planned film production capacity of 10GW and a backboard production capacity of 10GW; 2) The first phase plans to produce 6GW of phototransfer film.

Profit forecasting

The profit forecast was lowered and the “buy” rating was maintained. The company is a leader in photovoltaic film and backpanels, and the non-photovoltaic business is expected to create a second growth curve. Considering the impact of large fluctuations in raw material prices, the company's PV film shipments and profits fell short of expectations. We lowered the company's profit forecast for 2024-2025 and added a profit forecast for 2026. The company's net profit for 2024-2026 is 2.13, 3.11, and 396 million yuan (net profit to mother before the reduction was 2.53 million yuan and 350 million yuan, respectively), up 105.93%, 45.99%, and 27.09% year-on-year respectively. The corresponding EPS is 0.49, 0.71, and 0.90 yuan, respectively. The corresponding PE is 24 times, 16 times, and 13 times, respectively, and maintained The company's “buy” rating.

Risk warning: Demand for components falls short of expectations; worsening competitive landscape; fluctuating raw material prices; risk of recovery of accounts receivable.