The scale of household photovoltaics continues to expand, maintaining the “gain” rating
In '23, the company achieved revenue of $57.251 billion, +24.53% year over year, net profit to mother of 3,686 billion yuan, -8.38% year over year, net profit after deducting non-return to mother of 3.829 billion yuan, or +14.95% year over year, mainly due to asset impairment and preparation for recovery. In the context of the “county-wide promotion” policy and stimulated by silicon price reductions, we believe that the company's distributed business is expected to usher in rapid growth. We expect the company's 24-26 EPS to be 2.12/2.56/3.17, respectively. Based on the segmented valuation method, the average PE values for low voltage electrical appliances and photovoltaic companies in 24 years were 16.5 and 10.1, respectively. Considering that the company's expected growth rate in the low-voltage appliance and photovoltaic business was lower than that of the corresponding comparable company, the two businesses were given 12.5 and 8 times PE in 24 years (EPS was 1.15/0.97, respectively), corresponding to a target price of 22.14 yuan, maintaining an “increase” rating.
Changes in revenue structure led to a decline in profitability. Expense control capacity increased the company's 23-year gross profit margin of 21.97%, year-on-year -1.14pct, net interest rate 8.64%, year-on-year -1.62pct. The decline in profitability was mainly due to changes in revenue structure. PV business revenue was +8.15pct to 63.94% year over year, gross profit margin 18.43% year on year, -2.13pct year on year; low-voltage electrical appliances accounted for -7.29pct to 35.18% year on year, gross profit margin of 28.04% year on year, +1.85pct year on year. The cost rate for the 23-year period was 11.58%, -1.48pct year on year. The results of cost reduction and efficiency were remarkable. The company's net profit for 1Q24 was 1,081 billion yuan, -10.06%/+55.49%, net profit without return to mother was 1,032 million yuan, -4.98%/+21.84% YoY. 1Q24 achieved gross and net margins of 22.94%/8.61%, +3.57/+2.10pct, respectively. The company's gross margin showed an upward trend. We estimate that the share of high gross margin products has increased.
New installations of distributed photovoltaics are improving, and the scale of the household photovoltaic business continues to expand, and silicon price reductions drive module prices down, thereby reducing the initial cost of distributed photovoltaic project systems. According to data from the National Energy Administration, the 1Q24 distributed photovoltaic system added 23.8 GW of installed capacity, an increase of 31% over the previous year.
As one of the earliest domestic enterprises engaged in household photovoltaics, the company has a rich history in the industry. By the end of 1Q24, the company's photovoltaic power plant operating scale was 16.85GW, up 48% year on year. Among them, the operating scale of centralized/industrial/commercial/household photovoltaic power plants was 1.80GW/0.49GW/14.56GW, respectively, +48%/-58%/+62% year-on-year. The subsidiary Zhengtai Energy achieved revenue of 29.606 billion yuan and net profit of 2,603 billion yuan in 23 years, added more than 12 GW of installed capacity for household use, a market share of about 29%, sold about 8 GW of power plants, and greatly improved asset turnover efficiency.
Low-voltage appliances optimize channel layout, and international business is growing rapidly
The company's smart appliances segment achieved revenue of 21.1 billion yuan in '23, +5.9% year-on-year. Zhengtai International achieved revenue of 4.469 billion yuan in 23 years, +16% over the same period. The main reason was the continuous improvement of overseas channels. Localized national companies accumulated 30+, the localization rate reached 65%, and 40+ new channel providers were added. According to data from the National Energy Administration, the electricity consumption of the entire society in the first quarter of '24 was 2.3 trillion kilowatt-hours, an increase of 9.8% over the previous year. We anticipate that the recovery in downstream demand is expected to drive steady growth in the company's low-voltage appliance business.
Risk warning: industry competition intensifies; raw material prices fluctuate.