Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved operating income of 81,556 billion yuan, a year-on-year increase of 11.74%, and realized net profit of 7.039 billion yuan, an increase of 27.23% over the previous year, and a cash dividend of 5.63 yuan (tax included) for every 10 shares; 2024Q1 achieved operating income of 15.971 billion yuan, a year-on-year decrease of 22.02%, and achieved net profit to mother of 483 million yuan, a year-on-year decrease of 118.70%.
The scale of shipments increased steadily, and prices in the industrial chain fell rapidly, putting pressure on the company's profits in stages. In 2023, the company's component sales increased 39.47% year on year to 53.15 GW (2.16 GW without personal use), ranking among the top four in the world (InfoLink statistics), driving the company's component business revenue to increase 11.13% year over year to 78.175 billion yuan, and gross margin increased by 3.97 pcts year on year to 18.28% year on year. Looking at the subregion, the American market performed well. Revenue increased 36.48% year on year to 13.572 billion yuan, gross margin increased 19.75 pcts year on year to 36.56%, and profitability was significantly higher than other markets.
2024Q1, the company continued to increase its market development efforts. Battery module shipments increased 37.26% year on year to 16.059 GW (including 528 MW for personal use). Overseas module shipments accounted for 62%, but due to the continued decline in industrial chain prices, the company's profitability was pressured, and gross margin decreased by 14.05 pcts to 5.06% year on year.
The integrated production capacity layout is leading the industry, and the global layout is expanding steadily. (1) By the end of 2023, the company's photovoltaic module production capacity was 95 GW, and the production capacity of silicon wafers and batteries reached about 90% of the module production capacity. The degree of upstream and downstream matching was far higher than that of other leading companies. Among them, the production capacity of N-type batteries exceeded 57 GW; as construction projects such as the Ordos High-tech Zone progressed in an orderly manner, the company's production capacity of silicon wafers/batteries/modules was expected to exceed 100 GW by the end of 24. (2) The company accounts for about 48% of overseas component shipments in 2023, and its sales network covers 165 countries and regions; the company continues to increase production capacity in overseas markets, and Vietnam's 5GW battery and US 2GW component projects are progressing according to plan, steadily advancing the company's global strategic layout.
The “two wings” layout is gradually being improved, and smart energy & new photovoltaic materials are expected to contribute to new performance increases. The company is guided by the “two wings in one” development strategy. In the “two wings”: (1) the smart energy division focuses on the three major businesses of centralized ground power plants, industrial and commercial distributed power plants, and household photovoltaic energy storage power plants. By the end of 2023, the scale of photovoltaic power plants held by the company had reached 2.165 GW; (2) the PV New Materials Division has developed photovoltaic crystal equipment and auxiliary materials, photovoltaic conductive materials, and component packaging materials supply chain supply chain layout, etc., which can effectively reduce risks and promote comprehensive cost optimization and cost improvement competitiveness.
Maintaining a “buy” rating: The rapid decline in industrial chain prices has put phased pressure on the company's profit. We lowered our profit forecast. The company is expected to achieve net profit of 29.25/39.18/4.916 billion yuan in 2024-26 (75% down/72% /increase). The current stock price is 16 times PE in 24 years. As an integrated component leader, although the company is under phased profit pressure, the company has obvious advantages in cost control, supply chain coordination and global layout. After adding new products, the profit of the comprehensive unit is expected to increase in the future, maintaining a “buy” rating.
Risk warning: external factors affect PV installation; increased competition, overcapacity; risk of exchange rate fluctuations, etc.