The company released the 2023 annual report and the 2024 quarterly report, with profit +27%/-119%, respectively; the company's component shipments continued to grow, competitiveness continued to improve; and maintained the purchase rating.
Key points to support ratings
The company's performance in 2023 increased 27.23% year on year: the company released its 2023 annual report and achieved annual revenue of 81,556 billion yuan, up 11.74% year on year; realized profit of 7.039 billion yuan, up 27.21% year on year; realized deduction of 7.140 billion yuan for non-profit, up 28.46% year on year. According to the annual report data, the 2023Q4 company achieved a profit of 275 million yuan, a year-on-year decrease of 87.76% and a month-on-month decrease of 85.93%.
The company's performance in the first quarter of 2024 fell 118.70% year on year: the company released its 2024 quarterly report, achieving revenue of 15.971 billion yuan, a year-on-year decrease of 22.02%; realized profit of -483 million yuan, a year-on-year decrease of 118.70%, a year-on-year decrease of 275.79%; achieved a comprehensive gross profit margin of 5.06%, a year-on-year decrease of 14.05 percentage points, and a year-on-year decrease of 8.18 percentage points.
Shipments maintained high growth and increased profitability: In 2023, the company achieved 57.09 GW of module shipments, an increase of 44% over the previous year. The company has abundant production capacity. By the end of 2023, the module production capacity was over 95 GW, and the degree of integration was about 90%. Among them, the company's N-type battery production capacity exceeded 57 GW. The company is actively promoting new construction projects such as Vietnam's 5GW batteries, US 2GW modules, Ordos 30GW silicon wafers, 30GW batteries, and 10GW modules. The target is that the production capacity of silicon wafers, batteries and modules will all exceed 100GW by the end of 2024. The company's profitability continued to improve in 2023. PV modules achieved annual revenue of 78.175 billion yuan, up 11.13% year on year, gross profit margin 18.28%, up 3.97 percentage points year on year.
24Q1's new production capacity climbed, and higher costs affected profit release: 2024Q1 shipped 16 GW of battery modules, of which overseas module shipments accounted for about 62%. Due to the sharp drop in component sales prices since the second half of 2023, the profitability of the company's products declined, and the company's product profitability declined. At the same time, it was compounded by preparing inventory prices and calculating payment expenses for equity incentive shares, which led to losses in the first quarter. We believe that with the gradual normal operation of the company's new production capacity, the company's battery module production costs are expected to drop to industry-leading levels, promoting the restoration of the company's profitability.
valuations
Based on the current industrial chain price, the company's current production capacity and production capacity plan, we adjusted the company's 2024-2026 earnings forecast to 0.70/1.16/1.47 yuan (the original 2024-2026 forecast was 3.69/4.60/- yuan), corresponding to a price-earnings ratio of 20.2/12.1/9.6 times; maintaining the purchase rating.
The main risks faced by ratings
International trade barriers risk; industry demand falling short of expectations; price competition exceeding expectations; PV policy risk; cost reduction falling short of expectations; technical cost performance falling short of expectations.