Key points of investment
There was a high increase in PV module shipments. Net profit to mother increased by 153.20% year on year in 2023. In 2023, the company achieved total operating income of 118.682 billion yuan, an increase of 43.55% year on year; net profit to mother of 7.440 billion yuan, up 153.20% year on year; net profit after deducting non-return to mother was 6.904 billion yuan, up 152.09% year on year.
With 2023Q4, the company achieved total revenue of 33.585 billion yuan, an increase of 12.31% year on year; net profit due to mother was 1,086 million yuan, a decrease of 13.81% year on year; net profit after deducting non-return to mother was 857 million yuan, a decrease of 24.13% year on year.
N-type technology continues to lead the way and improve the global supply layout
In 2023, the company sent a total of 83.56 GW solar photovoltaic products to the world, including 78.52 GW of photovoltaic modules, of which type N shipped 48.41 GW, accounting for about 62%. The company continues to lead the way in N-type technology and mass production scale. At the end of 2023, the company has put into production more than 70 GW of high-efficiency N-type batteries. The average efficiency of mass production of N-type batteries exceeds 25.8%, the average mass production efficiency in the first quarter of 2024 has exceeded 26%, and the power of N-type modules is about 30W higher than that of P-type products of the same version. By the end of 2023, the vertical integration production capacity of the three core sectors of silicon wafers, batteries and modules reached 85 GW, 90 GW, and 110 GW respectively, and the integrated production capacity support rate reached more than 85%. The company has further expanded the global integrated supply chain, including factories in Southeast Asia. By the end of 2023, the company had the largest overseas integrated production capacity of more than 12 GW of silicon wafers, batteries and modules in the industry.
Digital transformation reduces costs and increases efficiency, and energy storage+BIPV is expected to create a future performance growth point in 2023. The company is actively exploring smart factory construction to ensure that cutting-edge technology can implement finished products and cover the market in the shortest possible time. The entire production process of the company's smart factory is managed collaboratively by machine learning, an automatic optimization system for artificial intelligence equipment, an intelligent self-maintenance system, and a real-time status monitoring system for intelligent production. The 56GW vertical integration large base project in Shanxi is another production model innovation led by the company in the photovoltaic industry. In terms of emerging business, the company released comprehensive energy storage solutions covering the source network side, industry, commerce, and household side, and signed orders with many power developers, distributors, and end customers around the world. In 2023, the company's 4 GWh energy storage system production line was successfully put into operation, and subsequent battery and system production capacity progressed in an orderly manner; in addition, the company continued to develop in the field of photovoltaic building integration (BIPV), and the total shipment volume in 2023 has exceeded 100 megawatts.
Profit forecasting and valuation
The profit forecast was lowered and the “buy” rating was maintained. The company is a global leader in photovoltaic modules, and continues to lead the N-type technology and scale. Considering that the profitability of PV modules falls short of expectations, we lowered the company's profit forecast for 2024 and 2025 and added the 2026 profit forecast. Net profit for 2024-2026 is expected to be 44.52, 61.65, and 8.058 billion yuan respectively, with year-on-year growth rates of -40%, 38%, and 31%, respectively. The corresponding EPS is 0.44, 0.62, and 0.81 yuan/share, respectively, and the corresponding PE is 17, 13, and 10 times the corresponding PE, respectively. Maintain a “buy” rating.
Risk warning
Demand for PV installations fell short of expectations; raw material prices fluctuated greatly; and the competitive landscape deteriorated.