Matters:
The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 118.682 billion yuan, +43.55% year on year; net profit to mother of 7.404 billion yuan, +153.41% year on year; comprehensive gross profit margin of 14.04%, +3.59pct year on year; net profit margin 6.27%, +2.72 pct year on year. 2024Q1 achieved revenue of 23.084 billion yuan, -0.30% YoY, -31.27%; net profit to mother of 1,176 billion yuan, -29.09% YoY, +8.24% month-on-month; comprehensive gross profit margin of 9.58%, -4.22pct, -0.08pct month-on-month; net profit margin of 5.09%, YoY -2.07 pct, +1.86pct month-on-month. The performance was in line with expectations.
Commentary:
The company's component shipments rank first in the industry, with N-type shipments accounting for more than 60%. In 2023, the company sent 83.56 GW of solar photovoltaic products to the world, including 78.52 GW of photovoltaic modules, which ranked first in the world in module shipments; among module shipments, N-type modules were shipped 48.41 GW, an increase of 352% over the previous year, accounting for about 62%. The company shipped 19.9 GW of modules in the first quarter, and continued to maintain a high year-on-year growth rate. By the end of 2023, the company's production capacity of silicon wafers, batteries and modules reached 85 GW, 90 GW and 110 GW respectively, with an integrated production capacity support rate of more than 85%. Among them, the company has put into production more than 70 GW of high-efficiency N-type batteries. Currently, the company has more than 12 GW of integrated silicon wafer-to-component production capacity in Southeast Asia.
N-type batteries continue to make breakthroughs in research and development, and mass production efficiency has exceeded 26%. The company's high efficiency N-type battery TopCon R&D reached 26.89%, and the highest efficiency of developing perovskite laminated batteries based on N-type TopCon reached 32.33%. The average efficiency of mass production in the first quarter of 2024 has exceeded 26%, and efficiency continues to improve.
With the advantage of overseas production capacity, the company is expected to receive high-priced overseas orders. Due to intense competition in the domestic market, component prices continue to reach new lows, and we expect that profits in the domestic market will tend to lose money. With the implementation of the company's integrated production capacity in Southeast Asia and the US, it is expected that the company's ability to obtain orders in the US and the Middle East in high-price overseas markets will be further enhanced, and the company's profit will be superior to the industry average.
Continuing to break through itself, the company's share of N-type models is expected to increase further this year, and battery mass production efficiency will continue to improve. In 2024, the company expects the production capacity of silicon wafers, batteries, and components to reach 120 GW, 110 GW, and 130 GW respectively, with N type production capacity exceeding 100 GW. At the same time, efforts will be made to increase the average mass production efficiency of N-type batteries to 26.5%, and strive to achieve the shipment target of 100-110GW, of which type N accounts for close to 90%.
Investment advice: As an industry leader, the technical advantages of N-type batteries continue to show, and the company's profit is expected to maintain a good level. Considering the intensification of competition in the industry, we adjusted our profit forecast. The company's net profit for 2024-2026 is estimated to be 44.90/62.70/8.960 billion yuan (59.70/7.740 billion yuan before 24/25), respectively, and the current market value corresponding to PE is 17/13/9 times, respectively. Referring to comparable company valuations, the 2025 15x PE was given, corresponding to a target price of 9.4 yuan, maintaining the “recommended” rating.
Risk warning: PV demand falls short of expectations, company capacity release falls short of expectations, industry competition intensifies, etc.