The leading position of integrated components is stable and maintains an “gain” rating
According to the company's 23 annual report & 24Q1 quarterly report, the company's revenue for 23 was 81,556 billion yuan, up 11.74%; net profit to mother was 7.039 billion yuan, up 27.21%; after deducting non-net profit of 7.140 billion yuan, an increase of 28.46%. The company's 24Q1 revenue was 15.971 billion yuan, down 22.02%; net profit to mother and net profit after deduction of non-net profit were -483 million yuan and -369 million yuan respectively. The loss was mainly due to sharp component price reductions.
Considering the impact of low prices in the industrial chain, we lowered the company's component shipments and gross margin assumptions, and lowered the company's EPS to 1.91/2.38/2.60 yuan (previous value: 3.09/3.63/-yuan). Referring to Wind's consensus expectations, it is 9.40 times the company's PE in 24 years. Considering the company's leading component integration layout, we gave the company 10 times PE for 24 years, corresponding to a target price of 19.10 yuan (previous value: 27.30 yuan), maintaining an increase rating.
Advanced production capacity continues to be released, and the globalization of brand layout accelerates
According to the company's 23 annual report, as of the end of 23, the company's photovoltaic module production capacity was 95 GW, and the production capacity of silicon wafers and batteries reached about 90% of the module production capacity, of which the N-type battery production capacity exceeded 57 GW. According to the company's future production capacity plan, the company will steadily build new production capacity in '24 to meet growing customer demand. By the end of '24, the company's production capacity for silicon wafers, batteries and modules will all exceed 100GW. According to the annual report, the company broadened its global marketing network and brand advantage, and annual component shipments reached 57.094 GW (including 2.156 GW for personal use), reaching a record high, with overseas component shipments accounting for about 48%.
“One, two wings” reshaped the business structure, and continuous innovation led industry companies to continue to increase investment in R&D. In '23, R&D expenses increased by 13.44%, and the number of R&D personnel also increased by 8.57%. On the business side, the company completed the optimization of the industrial chain structure with an integrated two-wing layout of “photovoltaic products+smart energy+new photovoltaic materials”. The company's battery and module technology has always maintained a leading level in conversion efficiency and cost control. In terms of batteries, the conversion efficiency of the company's N-type Bycium+ (Bycium+) batteries has reached 26.3%. The pilot conversion efficiency of HJT Hycium (Hycium) batteries has been steadily improved, and cutting-edge technologies such as full back contact batteries, perovskite, and laminated batteries have been actively stocked. In terms of components, according to the company's annual report, DeepBlue 4.0 Pro, an N-type component product released in '23, uses new-sized rectangular silicon wafers, is equipped with Beixiu batteries, and integrates SMBB, high-density packaging and other technologies to improve quality and efficiency. The conversion efficiency exceeds 26%. BOS costs can be reduced by 2%-4.5% in different scenarios, and LCOE can be reduced by 2.5%-6%.
Repurchasing the company's shares shows confidence
According to the company's annual report announcement, the company plans to use no less than RMB 400 million (inclusive) and no more than RMB 800 million (inclusive) to repurchase the company's shares. All of the repurchased shares will be used for employee stock ownership plans or equity incentives, demonstrating the company's long-term ambition and firm confidence. According to the 23 annual report, as of December 31, 23, the company had repurchased 12.4836 million shares of the company through centralized bidding transactions through the Shenzhen Stock Exchange system, with a total transaction amount of 260 million yuan (excluding transaction fees such as stamp duty and transaction commissions).
Risk warning: component price fluctuations exceed expectations; downstream demand falls short of expectations, etc.