Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved operating income of 139.104 billion yuan, a year-on-year decrease of 2.33%, and realized net profit of 13.574 billion yuan, a year-on-year decrease of 47.24%, and a cash dividend of 9.05 yuan (tax included) for every 10 shares; 2024Q1 achieved operating income of 19.570 billion yuan, a year-on-year decrease of 41.13%, and achieved net profit to mother of 787 million yuan, a year-on-year decrease of 109.15%.
Sales of various products remained industry-leading in 2023, and the rapid decline in industrial chain prices affected net profit in 2024Q1.
(1) In 2023, the company's silicon sales volume increased 50.79% year on year to 387,200 tons, with a global market share of more than 25%, and net profit of more than 45,000 yuan per ton. However, due to the rapid decline in prices, the company's high-purity silicon and chemical sector revenue fell 27.57% year on year to 44.799 billion yuan, and gross margin decreased 21.87 pcts year on year to 53.26% year on year. (2) In 2023, the company's battery sales increased 68.11% year on year to 80.66 GW (including personal use), and has been ranked as the number one in InfoLink's global solar cell shipments for 7 consecutive years. The breakthrough in the superimposed module sector in 2023 led the company's solar cell and module business revenue to increase 29.60% year on year to 69.372 billion yuan, and gross margin increased 2.58 pcts year on year to 12.77% year on year. (3) In the process of rapid iteration of battery technology, as a matter of prudence, the company calculated an impairment reserve of 4.730 billion yuan for fixed assets and technical improvement projects in 2023.
2024Q1 was affected by the rapid decline in prices in the industrial chain and the technological transformation and expansion of the company's battery production capacity. The company's revenue and profitability were under certain pressure, and gross margin decreased by 33.95 pcts to 9.20% year-on-year.
Silicon & TNC production capacity is expanding steadily, and production capacity of silicon/N-type batteries is expected to reach 850,000 tons/100 GW by the end of 2024.
(1) The company's silicon production capacity is 400,000 tons, and the Yunnan 200,000 tons/Inner Mongolia 200,000 ton projects are expected to be put into operation in 2024Q2/2024Q3, and the company's total silicon production capacity is expected to reach 850,000 tons by the end of 2024; (2) The company is simultaneously promoting the upgrading of existing PERC production capacity and the construction of new TNC production capacity. It is expected to complete about 38 GWPERC production capacity transformation in 2024 and 25GW of the Meishan 16GW/Shuangliu base. By the end of 2024, the company's TNC battery production capacity will exceed the scale. 100GW In 2024, the company strives to ship 550,000 tons of high-purity crystalline silicon business and 90 GW of solar cells (including personal use).
Module shipments in 2023 entered the top five in the world, and production capacity and planned shipment scale were further increased in 2024. In 2023, the company's component sales increased 292.08% year over year to 31.11 GW, and shipments entered the top five in the world (InfoLink data). As of April 2024, the company has a component production capacity of 75 GW, and it is expected that the company's component production capacity will further increase to 80 to 100 GW in 2024-2026. In 2024, the company strives to ship 50 GW of modules, and the photovoltaic power generation business added 1 GW of construction investment in the “fishing and light integration” project.
Maintaining a “buy” rating: Prices in all parts of the industry chain are falling rapidly. As a prudent measure, we lowered the company's profit. The company is expected to achieve net profit of 42.04/66.04/9.551 billion yuan in 24-26 years (70% down/63% /increase). The current stock price is 23 times PE in 24 years. As an absolute leader in silicon materials, the company is leading the industry in the pace of expanding production. In the future, its market share will further increase, and the layout of new battery technology/components is also expected to bring additional increase to the company's profits and maintain a “buy” rating.
Risk warning: The installed capacity of the photovoltaic industry fell short of expectations; the company's capacity investment and product sales fell short of expectations; the price war for overcapacity was more intense than expected; the company chose the wrong technology route or capacity expansion was unable to keep up with the trend.