Core views
In 2023, the company achieved operating income of 81,556 billion yuan, a year-on-year increase of 11.74%, and achieved net profit of 7.039 billion yuan, an increase of 27.21%; in 2024, the company achieved operating income of 15.971 billion yuan, a year-on-year decrease of 22.02%, and realized net profit to mother of 483 million yuan, a year-on-year decrease of 118.70%. The pressure on the company's performance is mainly due to depreciation and declining prices in the industrial chain. Module shipments increased significantly in 2023, and N-type production capacity expanded at an accelerated pace. By the end of 2023, the company's photovoltaic module production capacity was 95 GW, and the production capacity of silicon wafers and batteries reached 90% of the module production capacity, of which the N-type battery production capacity exceeded 57 GW. The company has good cash flow and strong management capabilities. I am optimistic that the company can cross the industry cycle and show long-term advantages.
occurrences
The company released the 2023 Annual Report & 2024 Quarterly Report
In 2023, the company achieved operating income of 81,556 billion yuan, a year-on-year increase of 11.74%, achieved net profit of 7.039 billion yuan, an increase of 27.21% over the previous year, and realized net profit without deduction of 7.140 billion yuan, an increase of 28.46% over the previous year. In 2024, Q1 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%, and realized net profit without deduction of 369 million yuan, a year-on-year decrease of 114.81%.
Brief review
Accrued depreciation and falling prices in the industrial chain dragged down the company's performance. Looking at a single quarter, in 2023, the company achieved net profit of 275 million yuan, a year-on-year decrease of 87.76%, a year-on-year decrease of 85.93%, and realized net profit deducted from non-return to mother of 111 million yuan, a year-on-year decrease of 95.19% and a year-on-year decrease of 94.03%. In 2024, Q1 achieved net profit attributable to mother of -483 million yuan, a year-on-year decrease of 118.70%, a year-on-month decrease of 275.64%, and realized net profit without deduction of 369 million yuan, a year-on-year decrease of 114.81%, and a year-on-year decrease of 432.43%. The pressure on the company's 23Q4 and 24Q1 performance was mainly due to falling prices in the industrial chain and the impact of accrued impairment. The 23Q4 and 24Q1 asset impairment losses were -18.65 billion yuan to 258 million yuan, respectively.
The scale of shipments has increased steadily, and overseas component shipments have continued to rise. In 2023, the company achieved component shipments of 57.094 GW (including 2.156 GW for personal use), with a year-on-year increase of 43.63%, of which overseas shipments accounted for about 48% and distribution shipments accounted for about 27%; in the first quarter of 2024, the company achieved 16.059 GW of components (including 528 MW for personal use), of which the proportion of overseas shipments increased to 62%, and the share of distribution shipments increased to 29%. The company's annual component shipment target for 2024 is 85-95GW.
Leading the integrated production capacity layout and expanding the advantages of global layout. By the end of 2023, 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. In 2023, the company successfully put into operation projects such as Vietnam 2.5GW pultrating and slicing, Baotou 20GW slicing, Ningjin 10GW slicing, Yangzhou 20GW battery, Dongtai 10GW battery and 10GW module.
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.
Q1 Profitability is under pressure, and the company is expected to cross the industry cycle with excellent management capabilities. 2024Q1's gross profit margin was 5.06%, a year-on-year decrease of 14.05 pct. The main reason was the rapid decline in industrial chain prices. Looking ahead to the full year 2024, we believe the company is expected to cross the industry cycle and show long-term advantages with industry-leading management capabilities.
Profit forecast: We expect the company's overall net profit to be 20.4 billion yuan, 33.4, and 4.51 billion yuan respectively for 2024-2026, corresponding to the closing price of May 9, PE 24.2, 14.8, and 10.9 times, respectively, giving a “gain” rating.
Risk analysis
1. The company's TopCon production expansion fell short of expectations. Currently, the company has a large reserve and is planning to expand TopCon's production. In the future, it will become the main source of growth in the company's performance. If production capacity construction falls short of expectations, it may affect the company's future level of development. 2. The market competition in the TopCon industry is intensifying. Currently, the market plan is that TopCon's production capacity is relatively high. If it is put on the market on a large scale in the next two years, and TopCon products do not show significant differentiation, it may affect TopCon's profit. 3. Rapid expansion of industry capacity and risk of declining profitability. At present, the PV industry is planning to expand production on a large scale. If production capacity is gradually invested in the subsequent industry, then the company may face the risk of increased competition and declining profitability.