Incident: The company achieved operating income of 81,556 billion yuan in 2023, an increase of 11.74% over the previous year; achieved net profit of 7.039 billion yuan to mother, an increase of 27.21% over the previous year. 2024Q1 achieved operating income of 15.971 billion yuan, a year-on-year decrease of 22.02%; realized net profit to mother of 483 million yuan, a year-on-year decrease of 118.70%.
The 2023 results were in line with expectations, and overseas markets contributed significantly to profits. In 2023, the company shipped 57.094 GW of battery modules (including 2.156 GW for personal use), an increase of 43.63% over the previous year. Among them, overseas shipments of components account for about 48%, and distribution shipments account for about 27%. PV modules achieved operating revenue of 7.817 billion yuan, up 11.13% year on year; gross profit margin was 18.28%, up 3.97pp year on year. The company's component sales volume is 53.15 GW, the average sales price is 1.47 yuan/W, and the gross profit per unit is 0.27 yuan/W. The company is building a vertically integrated industrial chain production plant in Southeast Asia and a module factory in the US to strongly guarantee the supply of modules to overseas markets, especially to countries with trade barriers to domestic photovoltaic products. Overseas markets contributed a significant level of profit to the company in 2023. The gross margin in the American market was 36.56%. Vietnam's silicon wafer and battery/module subsidiaries (mainly exported to the US) contributed 3,656 billion yuan and 1,597 billion yuan to net profit respectively.
In 2023, the company calculated inventory depreciation losses of 1,015 billion yuan and fixed asset impairment losses of 1,292 billion yuan.
2024Q1 shipments continued to grow, and performance was under phased pressure. 2024Q1's battery module shipments were 16.059 GW (including 528 MW for personal use), an increase of 37.26% over the previous year. Among them, overseas shipments of components account for about 62%, and distribution shipments account for about 29%. Affected by increased competition in the industry and the decline in the average price of component delivery, the company's performance lost. 2024Q1's consolidated gross margin was only 5.06%, down 14.05pp year over year.
2024Q1 accrued asset impairment losses of 258 million yuan, mainly due to preparation for increased impact of falling inventory prices. The company's new N-type production capacity is still climbing, which has a great impact on the 2024Q1 profit level. As the new N-type production capacity climbs, costs are better controlled, and the company's profit is expected to recover significantly in the future.
The integrated production capacity layout is perfect, and N-type production capacity takes the lead. By the end of 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, including more than 57 GW of N-type batteries. The conversion efficiency of n-type Bycium+ (Bycium+) batteries mass-produced by the company has reached 26.3%, and will continue to be optimized to further improve efficiency and stability. In addition, construction projects such as Vietnam's 5GW batteries, US 2GW modules, 30GW silicon wafers, 30GW batteries, and 10GW modules in the Ordos High-tech Zone 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, and the degree of vertical integration of production capacity will continue to increase.
Profit forecast. The company's 2024Q1 performance was under phased pressure due to increased competition in the industry, falling component delivery prices, and the concentrated decline in its TopCon production capacity. It is expected that with the end of the current production capacity climb, mass production efficiency will steadily improve, costs will be effectively controlled, and profits will recover in the future. The company continues to promote vertically integrated production rates, leading the N-type production capacity layout. The company's net profit from 2024 to 2026 is estimated to be 28.4, 44.0, and 7.63 billion yuan respectively, corresponding to PE of 17, 11, and 6 times, respectively.
Risk warning: Global PV installation fluctuation risk; overseas trade policy risk; exchange rate fluctuation risk.