Description of the event

TCL Central released its 2023 annual report and 2024 first quarter report. In 2023, the company achieved revenue of $59.146 billion, a year-on-year decrease of 11.74%; of these, 2023Q4 achieved revenue of 10.492 billion yuan, a year-on-year decrease of 38.87%, a year-on-year decrease of 23.73%; net profit to mother of 2.772 billion yuan, a year-on-year decrease of 267.84%; 2024Q1 achieved revenue of 99.33 billion yuan, the same The year-on-year decrease was 43.62%, and the month-on-month decrease was 5.33%; net profit to mother was 880 million yuan, down 139.05% year-on-year, and 68.26% month-on-month.

Incident comments

In 2023, the company shipped about 114 GW of silicon wafers, +68% year-on-year, with a market share of 23.4%. N-type and large-size (210 series) products were shipped 75GW, accounting for 66%, and the N-type market share was 36.4%, and the export market share continued to rank first. The company shipped 8.6 GW of components, an increase of 29.8% over the previous year. At the non-operating level, the company's estimated inventory price dropped by 2 billion yuan, Maxeon-related long-term equity investments and financial assets confirmed asset impairment losses of 1.01 billion yuan and fair value change losses of 440 million yuan respectively. The combined equity law confirmed Maxeon investment losses of 340 million yuan and interest income from convertible bonds of 108 million yuan, which had a total negative impact of 1.69 billion yuan on the company's performance.

2024Q1, the company shipped 34.95 GW of silicon wafers, +40% compared with the same period. N-type and large-size (210 series) products accounted for 88% of shipments. Among them, N-type 210 accounted for more than 90% of the export market, and continued to maintain its leading position. The company shipped 1.6 GW of components, a year-on-year increase of 6.8%. In addition, the company accrued asset impairment losses of 500 million yuan and investment losses of 140 million yuan due to participation in Maxeon.

Looking ahead, 2024Q2's silicon profits are expected to recover as demand improves. The product developed to N-type high-power and high-efficiency. Zhonghuan G12 and N-type strategic products have advantages in scale, technology, cost and market. By the end of 2023, the company's crystal production capacity was 183 GW, and the market share remained leading.

We expect the company to achieve net profit of 2.2 billion yuan in 2024, corresponding to PE 20 times.

Risk warning

1. Deterioration of the competitive landscape;

2. PV installation falls short of expectations.