Key points of investment
Continuously improving product competitiveness, the company's performance achieved rapid growth in 2023. The company achieved operating income of 1,540 billion yuan, an increase of 23.35% over the previous year, and achieved net profit of 165 million yuan to mother, an increase of 42.66% over the previous year. The gross profit margin was 22.90%, up 7.18 pct year on year, and the net profit margin was 10.71%, up 1.44 pct year on year. In 2023, the company continued to enhance the competitive advantage of junction box products in the industry, and the performance achieved rapid growth. In the fourth quarter of 2023, the company achieved operating income of 388 million yuan, up 46.58% year on year and 11.92% month on month; realized net profit of 20 million yuan, down 7.12% year on year and 67.46% month on month; gross profit margin of 24.01%, up 0.15 pct month on month, net interest rate 5.10%, down 8.71 pct month on month. Due to prudent reasons, the company calculated credit impairment in the fourth quarter, and net profit to mother declined significantly in the fourth quarter. In the first quarter of 2024, the company achieved operating income of 4.09 yuan, a year-on-year increase of 24.20%, a month-on-month increase of 5.31%, a net profit of 36 million yuan, a year-on-year decrease of 3.77%, a year-on-month increase of 80.74%, a gross profit margin of 18.90%, a month-on-month decrease of 5.11pct, a net profit margin of 9.62%, and a month-on-month increase of 4.52 pcts.
The production and sales of junction boxes continued to grow, and profitability improved significantly
In 2023, the total output of the company's junction box business reached 809.295 million sets, an increase of 36.27% over the previous year, and the total sales volume reached 80.2495 million sets, an increase of 37.33% over the previous year. Among them, the diode junction box business achieved revenue of 1.01 billion yuan, a year-on-year increase of 24.75%, and a gross profit margin of 20.00%, an increase of 6.34 pcts over the previous year. The chip junction box business achieved revenue of 245 million yuan, a year-on-year decrease of 12.07%, and a gross profit margin of 23.97%, an increase of 5.74 pcts over the previous year. The production and sales of the junction box business gradually increased. As the scale of shipments continued to expand, as cost control and product strength continued to improve, the profitability of the company's junction box business improved significantly in 2023.
Expand the junction box business product line and accelerate the layout of the auto parts industry. As of December 31, 2023, the company's total production capacity reached about 300,000 sets/day. In 2024, the company will further enhance the core competitiveness of the PV junction box as its main business and expand the junction box product line to meet the diversified needs of the market. At the same time, in 2023, the company entered the auto parts industry through an equity acquisition; in 2024, production will be accelerated and the layout will continue in the automotive wiring and other parts industries.
Profit forecasting and valuation
The profit forecast was lowered and the “increase in holdings” rating was maintained. The company is a leading domestic manufacturer of junction boxes. Driven by strong downstream PV demand, the company achieved steady growth in performance. Considering that the sales price of the company's downstream components continues to be low and the price of the junction box is under pressure, we lowered the company's profit forecast for 2024-2025 and added the 2026 profit forecast. The company's net profit to mother is estimated to be 2.58, 3.49, and 447 million yuan respectively (before the reduction, the company's net profit to mother for 2024-2025 was 3.11 million yuan and 461 million yuan, respectively). The corresponding EPS was 2.15, 2.91, and 3.72 yuan, respectively, and PE was 15, 11, and 9 times, respectively.
Risk warning: Raw material prices fluctuate, the PV industry chain cycle fluctuates, and market competition intensifies.