Core views
The company released its 2024 quarterly report. During the reporting period, it achieved operating income of 3,644 billion yuan and net profit of 176 million yuan to mother. Q1 Company's share of N-type silver paste continued to rise, with Q1 accounting for 85%-90%, of which LECO silver paste accounts for about 30%, leading the industry.
Q1 The company's silver paste market share was about 33.8%, maintaining a high position. Q1 The company's gross margin decreased by 0.24 pct month-on-month, mainly due to the rise in silver powder prices during the reporting period and the company's processing costs remained stable, but the net interest rate increased significantly by 2.17 pct month-on-month. On the one hand, the share of the company TopCon and LECO silver paste continued to increase during the reporting period, and the average processing cost increased by about 47 million month-on-month due to 5% VAT deduction. As the penetration rate of TopCon and LECO silver paste continues to increase, the company's silver paste volume is expected to rise sharply.
occurrences
The company released its 2024 quarterly report. During the reporting period, the company's revenue was 3,644 billion yuan, up 135.38% year on year, up 3.95% month on month, and net profit to mother was 176 million yuan, up 103.71% year on year, up 89.01% month on month.
Brief review
The company's N-type silver paste progressed rapidly, and the share of the company's N-type silver paste continued to rise during the reporting period.
The proportion of Q1 N-type silver paste shipments has reached 85-90%, increasing rapidly from month to month. Among them, LECO silver paste accounts for about 30%, leading the industry.
The company's silver paste market share remained high during the reporting period, and its position in the industry was stable. According to the silver consumption of 11 mg/W, with reference to PVInfoLink data, Q1 battery production is about 161 GW, corresponding silver paste demand is about 1,771 tons, the corresponding company's market share is about 33.8%, and the industry position is stable.
Q1 The gross margin of silver paste remained stable, and the net margin improved significantly. Q1 The company's comprehensive gross margin was 10.65%, down 0.24pct from month to month. The main reason was that silver paste prices rose due to the rise in silver powder prices during the reporting period and the company's processing fees remained stable. Q1 The company's net interest rate was 4.82%, up 2.17pct from month to month, a significant increase. On the one hand, the company's share of TopCon and LECO silver paste continued to increase during the reporting period, and average processing costs increased. On the other hand, other revenue increased by about 47 million yuan due to 5% VAT deduction.
As the penetration rate of TopCon and LECO silver paste continues to increase, the company's silver paste volume is expected to rise sharply. Currently, TopCon and LECO silver paste processing costs still have a significant premium compared to PERC silver paste. As the share of N-type product shipments increases, the company's average gross profit and net profit per kg is expected to continue to increase.
Investment advice: Silver paste is a rare step in the photovoltaic industry chain, and the company's N-type products are technologically advanced, benefiting mainly from the rapid transformation trend of N-type batteries. The company's net profit for 2024-2026 is estimated to be 6.65, 671, and 751 million yuan, respectively, with year-on-year growth rates of 72.55%, 0.78%, and 11.96%, respectively. Earnings per share are 4.73, 4.77, and 5.34 yuan, respectively. PE corresponding to the closing market value on April 30 is 11.57, 11.48, and 10.25 times, respectively.
Risk warning: 1. Competition in the industry is intensifying. In the silver paste process, due to low capital expenditure, rapid expansion of production capacity, and high production capacity flexibility, if new silver paste technology spreads rapidly, silver paste processing costs may drop rapidly; 2. There is a risk that raw material costs will fluctuate drastically. Referring to the 2022 polymer and material cost structure, silver paste accounts for more than 99% of direct material costs, mainly silver powder and silver ingots. If the cost of silver powder and silver ingots rises by 10%, the company's gross margin will also drop by about 10%; 3. Risk of exchange rate fluctuations. The company previously generated some US dollar loans in the process of importing silver powder from overseas. If the US dollar appreciates rapidly in the short term, the company may incur exchange losses; 4. There is a risk that the unit consumption of silver paste for photovoltaic cells will drop rapidly. Currently, the silver paste single consumption of N-type batteries is significantly higher than that of P-type batteries. Currently, the silver consumption (front) of mainstream P-type batteries is 5.8-7.5 mg/W, TopCon silver consumption is about 13 mg/W, and HJT batteries are around 20 mg/W. Therefore, we expect that the increase in the penetration rate of N-type batteries will drive an increase in silver paste unit consumption, but if the silver paste unit consumption of N-type batteries declines rapidly, the silver paste industry's market space growth rate may fall short of expectations, affecting the company's silver silver paste shipments; 5. Demand in the photovoltaic industry falls short of expectations. We forecast the company's shipments based on demand in the PV industry maintaining a growth rate of about 20% in the next few years. If demand in the PV industry falls short of expectations, the company's silver paste shipments may also fall below our forecast value; 6. There is a risk that operating cash flow will continue to be negative. Since the customer payment period is longer than the raw material procurement payment cycle in the silver paste process, operating capital requirements will continue to expand as the company's business scale expands, which may cause the company's operating cash flow to continue to be negative. 7. The company received an annual report inquiry letter on April 17, 2024, reminding us to pay attention to related risks.