Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved revenue of 5,059 billion yuan, +0.96% year on year; net profit to mother of 122 million yuan, or -49.04% year on year; deducted non-net profit of 108 million yuan, or -49.67% year on year. Q1 2024 achieved revenue of 1,529 billion yuan, +63.18% year over year; net profit to mother of 87 million yuan, +456.11% year over year; deducted non-net profit of 82 million yuan, +705.72% year over year.

The US factory is on the right track, and the bracket business is expected to expand rapidly. The company's solar bracket business revenue in 2023 was 3.137 billion yuan, +7.68% year over year. The initial construction of US bracket production capacity had a certain impact on the cost side. The gross profit margin of the bracket business was 10.87%, -1.8 pct year on year. The company has established deep cooperative relationships with NexTracker, GCS, FTC Solar, etc., and is expected to fully enjoy the boom in overseas PV brackets. We expect the company's solar bracket business revenue for the first quarter of 2024 to be about 1 billion yuan, which is the main source of revenue and profit. As the US factory gradually gets on track, the company's bracket business is expected to expand rapidly.

The company is leading in high-speed connector technology and is expected to contribute incremental revenue. The company's connector business revenue in 2023 was 1,784 billion yuan, -8.53% year-on-year, mainly due to weak downstream demand. We expect the company's connector business revenue to be about 500 million yuan in the first quarter of 2024, with high-speed connectors growing rapidly. Currently, the high-speed connector market has the characteristics of many varieties and small batches, and the entry threshold is high. The company's 5G SFP and SFP+ series products with complete independent intellectual property rights have been successfully developed and passed various performance tests with key customers. Technology research and development capabilities and lean production levels are in a leading position in the industry.

Investment advice: We maintain the company's 2024-2025 and add a profit forecast for 2026. We expect the company's net profit to be 3.77/5.07/604 million yuan in 2024-2026. We are optimistic about the rapid growth of the company's support business and maintain a “buy” rating.

Risk warning: Risk of overseas production capacity falling short of expectations, worsening industry competition, and fluctuating raw material prices.