Event: The company publishes the 2023 Annual Report and the First Quarter 2024 Report. In 2023, the company achieved operating income of 16.628 billion yuan, +19.35% year on year; realized net profit of 1.775 billion yuan, -23.45% year on year; 2024Q1 realized operating income of 3.311 billion yuan, +1.14% year on year; realized net profit to mother was 565 million yuan, +0.21% year over year.

The calculation put pressure on short-term performance, and the main business grew steadily. In Q4 2023, the company achieved operating income of 3.442 billion yuan and realized net profit of -549 million yuan. The main reason was that the company calculated various asset impairment preparations for 2023 based on the principle of full prudence, totaling 1,162 million yuan, of which 730 million yuan was prepared for bad debts due to accounts receivable and 4.12 yuan for inventory price reductions. Bad debt provisions for accruing accounts receivable increased year-on-year, mainly due to an increase in operating income during the reporting period and an increase in accounts receivable balances; secondly, due to cyclical fluctuations in the industry, there was a decrease in sales repayments received by the company during the reporting period.

By product, lithium battery intelligent equipment/intelligent logistics system/photovoltaic intelligent equipment/3C intelligent equipment achieved revenue of 12.642 billion yuan/1,431 billion yuan/1,028 million yuan/698 million yuan respectively, +27.12%/-15.55%/+121.85%/+15.29%, respectively. In terms of exports, the company achieved overseas revenue of 2,242 billion yuan in 2023, +87.52% year over year, gross margin of 16.15%, and -3.69pct year on year. The gross profit from overseas business was low in the second half of the year. The main overseas projects affected by the epidemic in the first half of the year concentrated on confirming revenue in the second half of the year.

The company has established new subsidiaries in Malaysia, Vietnam, etc., to further consolidate the global delivery system and expand the global service network. With the continuous upgrading of overseas business and continuous optimization of the global network and resource allocation, the gross margin of the company's overseas business is expected to gradually increase in the future.

Platformization+internationalization strengthen competitiveness. The company is one of the earliest domestic equipment companies to develop an international layout. Currently, it has established branches/subsidiaries in the United States, Sweden, Germany, Turkey, France, Hungary, Japan, South Korea, Vietnam, Malaysia, etc. At the same time, the company focuses on a platform-based strategy, based on intelligent manufacturing technology, starting from lithium battery and photovoltaic equipment manufacturing and extending to business sectors such as hydrogen energy, energy storage, new energy vehicles, laser precision, smart factories, etc. In the field of photovoltaics, the company took the lead in achieving GW grade process equipment R&D verification for XBC batteries, achieved new breakthroughs throughout its process, and has received more than 2 billion equipment orders; at the same time, the company has built the industry's first TopCon benchmark line and reached strategic partnerships with leading major customers. In the field of hydrogen energy, the company successfully delivered a 2000MW hydrogen energy electrolyzer stack line to a Fortune 500 customer, and provided the first domestic laser marking equipment for the first GW grade production line in China's perovskite industry. In addition, the company has also received orders for new energy battery PACK production lines from top European car brand customers. The company will continue to advance its internationalization strategy and platformization strategy, and is expected to continue to increase the share of overseas business and non-lithium battery businesses such as photovoltaics, creating the company's second growth curve.

Investment suggestions: Considering the global lithium battery development trend, the company will strengthen overseas expansion and superimpose the company's platform-based development strategy to effectively create a new growth pole. The company's net profit from 2024 to 2026 is estimated to be 3.23 billion yuan, 3,952 billion yuan, and 4.625 billion yuan respectively, and EPS is 2.06 yuan, 2.52 yuan, and 2.95 yuan respectively, corresponding to PE 11 times, 9 times, and 8 times, respectively. Maintain a “buy” rating.

Risk warning: Risk of downstream production expansion falling short of expectations, risk of global economic deterioration, risk of increased market competition, risk of new business expansion falling short of expectations.