Incidents:
The company publishes an annual report for 2023 and a quarterly report for the first quarter of 2024. In 2023, the company achieved operating income of 81,556 billion yuan, an increase of 11.74% over the previous year; realized net profit of 7.039 billion yuan, an increase of 27.21% over the previous year; realized net profit of 7.140 billion yuan after deduction, an increase of 28.46% over the previous year. 2024Q1 achieved operating income of 15.971 billion yuan, a year-on-year decrease of 22.02%; realized net profit of -483 million yuan, a year-on-year decrease of 118.70%; realized net profit after deduction of -369 million yuan, a year-on-year decrease of 114.81%.
Comment:
The advantages of industrial chain integration are obvious. In 2023, the company's module production capacity exceeded 95 GW, and the production capacity of silicon wafers and batteries was about 90% of the module production capacity. Among them, the production capacity of n-type batteries exceeded 57 GW, and the production capacity of all aspects increased in an orderly manner. In addition, construction projects such as Vietnam's 5GW batteries and US 2GW modules are progressing according to the plan. According to the company's future production capacity plan, the company's production capacity of silicon wafers, batteries and modules will all exceed 100GW by the end of 2024. The company's integrated industrial chain covers various production and application links such as solar silicon rods, silicon wafers, batteries and modules, achieving a high degree of matching between upstream and downstream production capacity, improving production efficiency, and effectively reducing product costs.
Adhere to technological innovation, reduce costs and increase efficiency, and cope with pressure to reduce product prices. The “internal volume” of the photovoltaic industry led to a decline in profitability. 2023Q4's gross margin fell to 13.23%, and 2024Q1 fell further to 5.06%. To cope with this situation, the company continued to support technology research and process innovation efforts over a long period of time, reducing costs while establishing technical barriers. The new n-type module DeepBlue 4.0 Pro released in 2023 can reduce the BOS cost by about 2%-4.5% and the LCOE by about 2.5%-6%. Compared with the original n-type module, the BOS cost can be reduced by about 1.4%-2.8%, and the LCOE can be reduced by about 0.7%-1.6%. The company invested 4.446 billion yuan in R&D in 2023, accounting for 5.45% of revenue. By the end of 2023, the company had authorized 1,263 patents for independent research and development, including 285 invention patents.
The company's global layout has obvious advantages, and overseas shipments account for a relatively high share. 2024Q1 accounts for 62% of overseas component shipments. At the same time, the company has set up 13 overseas sales companies, and the sales and service network covers 165 countries and regions around the world. In the short term, competition among enterprises has intensified, and prices in the industrial chain have dropped rapidly. In such an environment, companies with a global layout may be able to quickly adjust their sales share in favor of high-value markets to offset the effects of uncontrollable factors such as phased market downturns in individual countries or regions and international trade frictions, and is expected to maintain a steady development trend.
Profit forecast and investment rating: We expect the company's 2024-2026 revenue to be 786.40, 957.34, and 116.696 billion yuan, respectively, up -3.6%, 21.7%, and 21.9% year-on-year; net profit to mother is 37.63, 62.59, and 9.235 billion yuan, respectively, up -46.5%, 66.3% and 47.5% year-on-year. The current stock price corresponding to 2024-2026 PE is 12.86, 7.73, and 5.24 times, respectively, maintaining a “buy” rating.
Risk factors: PV demand falls short of expectations, risk of continuing decline in PV product prices, deterioration of the competitive landscape, international trade risks, etc.