Event: On April 29, 2024, the company released its 2024 quarterly report and 2023 annual report.
In '23, the company achieved operating income of 57.221 billion yuan, a year-on-year increase of 24.53%, achieved net profit of 3,686 billion yuan, a year-on-year decrease of 8.27%; realized net profit deducted from non-return to mother of 3.829 billion yuan, an increase of 14.95% over the previous year.
24Q1 achieved operating income of 15.917 billion yuan, a year-on-year increase of 1.12%, achieved net profit of 1,081 billion yuan, a year-on-year decrease of 10.06%, and realized net profit without deduction of 1,032 billion yuan, a year-on-year decrease of 4.98%.
Cost rates have been optimized, and cost reduction and efficiency have continued to advance. The company achieved gross margin/net margin of 21.97%/8.64% in '23, -1.15pcts/-1.63pcts year on year. By business, the gross margin of the low-voltage electrical/photovoltaic business was 28.04%/18.43%, +1.85pcts/-2.13pcts year on year, respectively. In terms of costs, the company's expense ratio was 11.59% during the 23-year period, down 1.47 pcts year on year, down 3.34%/2.16%, down -0.16 pct/-0.33pct year on year, and R&D expenses increased 3.77% year on year to reach 1,179 billion yuan. The main reason was that the company needed research and iteratively launched intelligent 3 series circuit breakers, NB2 small circuit breakers, new 5P plastic cases for power grids, and special distribution products such as inverters to drive market demand through value creation.
Household photovoltaics are leading in scale, responding to dual carbon to enhance brand influence. The company innovates and develops a full range of business models to meet the differentiated needs of millions of rural users, cultivate new household photovoltaic productivity, and deliver more than 1.2 million “how fast and economical” quality power plants to users around the requirements of high technology, high efficiency and high quality. In 23 years, the installed capacity exceeded 12 GW, accounting for about 29% of the country's new installed capacity of household photovoltaics. The market share remained number one in the industry for many years. The sales volume of power plants was about 8 GW, and asset turnover efficiency was greatly improved. Every year, it provides the whole society with nearly 24 billion kilowatts of green electricity, reducing carbon dioxide emissions by 19 million tons or more.
Deepen overseas layout with low pressure and build a global production capacity system. The company has accelerated the global business architecture system with regional headquarters and localized subsidiaries as the core. Localized national companies have reached 30+, and the localization rate has reached 65%. It has continuously strengthened cooperation with leading global customers, with more than 2,000 active channels and project customers worldwide, achieving business coverage in more than 140 countries; cooperating deeply with customers of power grid companies such as the Saudi Electricity Authority SEC and the Philippine Power Authority NGCP, while also focusing on green and low-carbon development trends, and is focusing on promoting leading new energy developers such as RWE and GreenlineEnergy Cooperate. The company accelerated the global supply chain layout, built 2 overseas factories, a total of 3 regional headquarters, and 4 regional logistics centers, and gradually built a global production capacity, supply chain layout and business guarantee system.
Investment advice: We expect the company's 2024-2026 revenue to be 656.04, 734.88, and 82,438 billion yuan, respectively, with corresponding growth rates of 14.6%, 12.0%, and 12.2%; net profit to mother will be 44.69 billion, 51.36, and 5.851 billion yuan respectively, corresponding growth rates of 21.2%, 14.9%, and 13.9%, respectively, based on the closing price of April 30, corresponding to 2024-2026 PE 10X, 8X, 7X. Maintain a “Recommended” rating.
Risk warning: raw material price fluctuation risk; exchange rate fluctuation risk.