Key points of investment
Asset impairment losses have a significant impact, putting pressure on short-term profits. TCL Central achieved revenue of 59.146 billion yuan (-12%) and net profit of 3.416 billion yuan (-50%) in 2023. Against the backdrop of a sharp drop in industrial chain prices, the company prepared 2.9 billion yuan for inventory price declines throughout the year. At the same time, MAXN shares were re-evaluated to prepare 1 billion yuan for impairment of long-term equity investments, which affected the level of performance for the year. 2024Q1 achieved revenue of 9.933 billion yuan (-44%), achieved net profit of -880 million yuan (-139%), and prepared an inventory price drop of 600 million yuan in a single quarter, putting further pressure on performance.
Silicon sales remain leading, and the component sector insists on differentiated competition. In 2023, the company shipped 114 GW of silicon wafers, an increase of 68% over the previous year, with a silicon wafer market share of 23.4%. In the first quarter of 2024, the company achieved 35 GW of silicon wafer sales, an increase of 40% over the previous year. Among them, N type 210 shipments accounted for 88%, and the N type 210 export market accounted for more than 90%, maintaining a leading position. In the module sector, the company insists on differentiated competition. It plans to acquire 16% of Huansheng Photovoltaic (Jiangsu)'s minority shareholder shares at a price of 174 million yuan, and also invest 72.5 million yuan to obtain MAXN's patent technology license for laminated photovoltaic modules. In the new round of photovoltaic development cycle where patent protection is becoming more and more complete, it can achieve collaborative development with MAXN on a global scale.
High efficiency, low cost, and high start-up help the faucet get through the cycle. As a leader in silicon wafers, the company has always maintained a leading manufacturing capacity. By the end of 2023, the company's crystal per capita labor productivity was 25 MW/person/year, 71% higher than the industry's second-highest labor productivity rate, 27MW/person/year, leading 98% over the industry's second-best. N-type products achieved a single monthly production lead of about 11.6%, and the number of kilogram chips produced was about 1.9. According to comprehensive calculations, the company is leading the industry's overall cost by about 3 points/w. While leading manufacturing capacity, the company maintains a high start-up strategy, further increasing the cost difference with industry competitors, and is expected to cross the bottom cycle.
Profit forecasting
We expect the company's net profit to be returned to mother in 2024-2026, respectively
19.79/32.83/3,956 billion yuan, corresponding to 2024-26, the company's PE was 21.41x/12.91x/10.71x, respectively, maintaining the “gain” rating.
Risk warning:
Demand for PV installations fell short of expectations.