1Q24 results are basically in line with market expectations
The company announced FY23&1Q24 results: the company's revenue in 2023 was 118.68 billion yuan, +43.6% year on year; net profit to mother was 7.44 billion yuan, +153.4% year over year, which is basically in line with our expectations. 1Q24's revenue was 23.08 billion yuan, -0.3% year-on-year, 31.3% month-on-month, net profit of 1,176 billion yuan, year-on-month -29.1%, +8.2% month-on-month, net profit of non-return to mother of 191 million yuan, -84.3% year-on-year. The difference was mainly investment income from disposal assets of 1,076 billion yuan. The 1Q24 performance was basically in line with market expectations, and the month-on-month decline in unit profit was mainly affected by the decline in component prices. Business level: In 2023, the company shipped 78.5GW of modules, including 48.4 GW of N-type modules, +352% over the same period last year, accounting for 62%. The 1Q24 company shipped 20GW of components, with a total shipment of 21.9GW, +51.2% year-on-year. The company guidelines 2Q components are shipped 24-26GW.
In terms of production capacity: At the end of 2023, the company's silicon wafer/battery/module production capacity was 85/90/110 GW, respectively, and Topcon batteries exceeded 70 GW. The company indicates that by the end of 2024, the production capacity of silicon wafers/batteries/modules will reach 120/110/130 GW, respectively, and the N type production capacity will exceed 100 GW.
Development trends
Module shipments continued to lead the market in 2024, and the share of European and American shipments increased. The company guides the shipment of 100-110GW of modules in 2024, with an increase of more than 30%. Among them, the proportion of N-type models is over 90%, and the current order coverage is 70%. In terms of shipping regions, the company is leading the share of Europe and the US to increase from 25% in 2023 to 30-35% in 2024, and we expect the US to account for nearly 10% of shipments. By the end of 2023, the company had an integrated overseas production capacity of more than 12 GW of silicon wafers/batteries/modules, and is currently building a 2GW module factory in the US. The company guidelines will be implemented in the first half of the year to provide production capacity guarantees for US shipments.
Continue to promote the construction of advanced production capacity and lead the industrial chain to reduce costs and increase efficiency technology. The first 14GW phase of the company's Shanxi base project was put into operation in March, but a fire accident occurred at the end of April. We expect the climbing to slow down to a certain extent. The company plans to start production of the second phase of 14GW at the end of July and complete production in October. The current 10-20 GWPERC battery production capacity will be fully completed by the end of 2024. In terms of research and development, the company aims for TopCon battery mass production efficiency to reach 26.5%/27% by the end of 24/25. Currently, TopCon has completed the introduction of LECO, and 0BB has completed preliminary tests and gradually introduced it according to the plan to promote double-sided poly; in terms of other battery technology, the company is building a TBC pilot line and plans to cover the market segment with small-scale production capacity. In terms of silicon wafers, the company completed the introduction of 50% tungsten wire, leading the fine wire industry.
Profit forecasting and valuation
Due to the decline in operating profits due to falling prices in the industrial chain, and accidents may have a certain impact on the decline in production capacity and shipment of Phase I batteries in Shanxi, we lowered our net profit by 42.5%/46.3% in 2024/2025 to 31.8/4.05 billion yuan. Considering 2024 may be at the bottom of the industry cycle, the company continues to lead the industry in N-type production capacity, technology, and shipments. We maintained the outperforming industry rating and lowered the target price by 18% to 10 yuan, corresponding to 31.4/24.7 times P/E in 2024/2025, with 32% upward space compared to the current stock price. The current stock price corresponds to 23.8/28.7 times P/E for 2024/2025.
risks
PV demand fell short of expectations, US trade policy risks, and the industry's supply and demand situation deteriorated.