Incidents:
Shijing Technology announced its 2023 and 2024Q1 results: in 2023, the company achieved operating income of 3.443 billion yuan, an increase of 140.19% over the previous year; realized net profit of 217 million yuan, an increase of 123.30% over the previous year.
With 2024Q1, the company achieved operating income of 860 million yuan, an increase of 49.52% over the previous year, and realized net profit of 79 million yuan, an increase of 122.49% over the previous year.
Investment highlights:
Revenue from process pollution prevention and control equipment has increased dramatically. In 2023, the company's process pollution prevention and control equipment achieved revenue of 3.25 billion yuan (accounting for 94.42% of total revenue), an increase of 152.18% over the previous year; terminal pollution control equipment achieved revenue of 149 million yuan (4.32% of total revenue), an increase of 34.81% over the previous year. Significant growth in core products led to a high overall revenue increase in 2023. 2024Q1, the company's business scale continued to grow rapidly, and revenue increased 49.52% year over year.
The photovoltaic cell project was put into operation, leading the technology route. On December 28, 2023, the company's first TopCon battery went offline. The company selected the current world's most mainstream TopCon technology route and adopted 210 compatible 182 large-size TopCon battery technology route+laser sintering. The photoelectric conversion efficiency can be increased by 0.2%, which can significantly reduce the company's battery's non-silicon manufacturing cost. After the equipment and process commissioning of the first phase of the company's project were completed, efficiency, yield, fragmentation rate and cost all reached leading levels. The company's Ziyang battery project laid the foundation stone and started construction at the end of March 2024.
Gross profit margins declined in the 2023 Annual Report. In 2023, the company's gross margin was 25.55%, down 2.64pct year on year; the company's sales expense ratio decreased 1.95pct to 2.17% year on year; R&D expenses increased 0.83 pct to 4.48% year on year; financial expenses decreased 1.14 pct to 1.84% year on year; and the company's net margin decreased 0.59 pct to 6.25% year on year. With the exception of 2024Q1, which increased the financial expenses ratio by 0.14 pct year on year, the company's other main cost rates (sales, management, R&D) all declined year on year.
The profit forecast and investment rating combined with the company's 2024 quarterly report, we forecast that the company's 2024/2025/2026 revenue will be 146.43/179.45/22.338 billion yuan, respectively, and net profit to mother will be 675/9.30/1,193 million yuan, respectively. The corresponding PE is 11/8/6 times, respectively, to maintain the “buy” rating.
Risks indicate the risk of capital shortage/financial constraints; the construction progress of new projects falls short of expectations; competition in the photovoltaic sector increases risks; the company's performance growth rate falls short of expectations; the growth rate of photovoltaic production capacity falls short of expectations; and accounts receivable risk.