Key points of investment
The scale of production and sales continued to expand, and the phased impact of impairment on profit in 2023, the company achieved operating income of 12.259 billion yuan, a year-on-year increase of 28.01%; achieved net profit to mother of 527 million yuan, a year-on-year increase of 31.18%, achieved a gross sales margin of 15.36%, a year-on-year decrease of 0.27pct, and achieved a net sales profit margin of 4.85%, a year-on-year decrease of 0.04 pct. Thanks to the continuous rise in global demand for photovoltaic products and services in 2023, the company's performance grew rapidly. With 2024Q1, the company achieved operating income of 1,288 billion yuan, a year-on-year decrease of 52.43%; achieved net profit to mother of -172 million yuan, a year-on-year decrease of 268.11%; achieved a gross sales margin of -3.28%, a year-on-year decrease of 20.40 pcts; achieved a net sales margin of -13.95%, a year-on-year decrease of 18.14 pcts. At the same time, the company's sales scale decreased, taking into account inventory price reduction preparations, and profit declined significantly. 2024Q1
Module production and sales reached a new high, and photovoltaic application systems continued to advance
Various businesses are growing steadily, and business collaboration continues to be strengthened. 1) Components: In 2023, the company's component business achieved revenue of 4.454 billion yuan, up 46.87% year on year, accounting for 36.33% of total revenue; achieved gross profit margin of 12.74%, up 7.48 pct year on year; achieved 2.99 GW of module output, up 10.18% year on year; achieved sales volume of 3.00 GW, an increase of 16.54% year on year, and the component business achieved rapid development. 2) Backboard: In 2023, the company's backboard business achieved revenue of 2,306 million yuan, a year-on-year decrease of 15.07%, accounting for 18.81% of total revenue; achieved a gross profit margin of 17.43%, a year-on-year decrease of 6.39 pcts; achieved a backboard output of 263 million square meters, an increase of 3.93%; and achieved sales volume of 256 million square meters, an increase of 3.68% year-on-year. 3) PV application system: In 2023, the company's photovoltaic application system business achieved revenue of 4.584 billion yuan, an increase of 24.71% over the previous year, accounting for 37.39% of total revenue; achieved a gross profit margin of 16.76%, a year-on-year decrease of 0.66pct; the company focused on downstream household distributed PV development, developing a total of 1.8 GW of distributed PV by the end of 2023, and striving to build a high-quality EPC service provider.
High R&D investment drives continuous breakthroughs in battery technology, and the scale of production capacity is steadily expanding 1) In terms of R&D, the company continues to increase R&D efforts. Currently, the company's battery products are all high-efficiency N-type TopCon double-sided batteries. The development and application of “Sino-Thai special injection metallization technology” improves battery product conversion efficiency and low light response, and reduces temperature coefficient and attenuation rate. Through the superposition and introduction of a number of new efficiency improvement technologies and continuous optimization processes, the average conversion efficiency of TopCon2.0 16BB main gate battery mass production exceeded 26%, which is in the leading position in the industry. The company's 182-size TopCon cell laboratory's R&D conversion efficiency reached 26.7%. 2) In terms of production capacity, the company's new production capacity was implemented in an orderly manner. The first phase of the company's Shanxi high-efficiency monocrystalline TopCon battery smart factory project with an annual output of 16 GW has been put into operation, and the second phase of the 8GW project is in the process of climbing capacity. The company has accelerated the expansion of backboard production capacity. As of December 2023, the company has an annual backboard production capacity of 320 million square meters, and the cumulative delivery of backboard products exceeds 260 GW.
Profit forecasting and valuation
The profit forecast was lowered and the “buy” rating was maintained. The company is a leader in photovoltaic backpanels, and also develops high-efficiency TopCon battery modules and photovoltaic application systems business. Considering that the price of PV modules is low, we lowered the company's profit forecast for 2024-2025 and added a profit forecast for 2026. We expect the company's net profit to be 2.90, 4.09, and 467 million yuan respectively in 2024-2026, corresponding to EPS of 0.27, 0.38, and 0.43 yuan, respectively, and PE 27, 19, and 17 times, respectively.
Risk warning: downstream demand falls short of expectations; production capacity of new projects falls short of expectations; industry competition intensifies