Increased competition in the industry affected profitability, and depreciation affected net profit returned to mother in 2023 Dongfang Risheng released the 2023 Annual Report and 2024 Quarterly Report. The company achieved operating income of 35.33 billion yuan in 2023, yoy +20.2%. Achieved net profit of 1.36 billion yuan, yoy +45.8%, realized net profit deducted from non-mother of 1.58 billion yuan, yoy +55.8%. Asset impairment losses of 550 million yuan were calculated, and credit impairment losses of 210 million yuan were calculated.
Of these, 2023Q4 achieved revenue of 7.31 billion yuan, QoQ -29.8%, and YOY -12.6%. Net profit to mother was 84 million yuan, QoQ -79.9%, YOY -55.3%. After deducting non-net profit of $11 million, YOY -95.6%. The gross margin and net margin for single Q4 were 13.2%/1.8%, respectively, -4.2/-2.9 pct month-on-month, respectively. 2024Q1 achieved revenue of 4.93 billion yuan, yoy -27%, net profit to mother of 280 million yuan, yoy -189.9%, net profit after deducting non-return to mother of 338 million yuan. Accrued asset impairment losses of $135 million. Considering the decline in the unit sales price of the company's components and energy storage systems, we lowered the company's profit forecast for 2024-2025. We expect net profit to be 5.42/785 million yuan (originally 22.26/2,793 billion yuan), adding an additional 2026 profit forecast of 886 million yuan, EPS of 0.48/0.69/0.77 yuan. The PE corresponding to the current stock price is 29.5/20.4/18.3 times, respectively. Considering the downturn in the industry's growth rate and increased competition, the company's profit level is under great pressure and downgraded to a “gain” rating.
The component business had high revenue growth, and the first-mover advantage of heterojunction technology was significant. In 2023, the company's component business achieved revenue of 28.67 billion yuan, yoy +18.9%, gross profit margin of 13.6%, and yoy+8.6pct.
Sales reached 18.99 GW, overseas component sales reached 8.84 GW, achieved a major breakthrough in component shipments in emerging markets such as Brazil, Hungary, Australia, and Colombia, and 1.4 GW of shipments to the US market. In terms of R&D and mass production of heterojunction components, based on its own technical support, full HJT industry chain integration, and integrated platform support, the company has successfully mass-produced half G12 wafers, 110 μm silicon wafers, 90 μm heterojunction cells, and pure silver, using less than 7 mg/W. The average daily efficiency can reach 26%, and the usable yield is 99.6%.
Accelerated energy storage business contributes to profit growth
In terms of lighting and auxiliary photovoltaic products, the company achieved revenue of 2.34 billion yuan in 2023, yoy +61.5%, gross profit margin of 22.68%, yoy+2.1pct. Shuangyili, a subsidiary of the company mainly responsible for the energy storage system integration business, achieved revenue of 2.08 billion yuan, net profit of 206 million yuan, and a net interest rate of 9.9% in 2023. In addition, Shuangyili plans to expand the integrated production capacity of the 10GWh energy storage system in two phases in Ninghai County in an effort to increase its market share level.
Risk warning: Heterojunction mass production is falling short of expectations; competition in the energy storage industry is intensifying.