Key points of investment
The decline in silicon prices affected performance. Net profit due to a decrease of 32.75% year on year in 2023, the company achieved total operating income of 98.206 billion yuan, an increase of 1.76% year on year; net profit to mother of 10.703 billion yuan, a decrease of 32.75% year on year; net profit after deducting non-return to mother of 10.386 billion yuan, a decrease of 34.70% year on year. With 2024Q1, the company achieved total revenue of 23.563 billion yuan, a year-on-year decrease of 11.08%; net profit to mother was 1,994 billion yuan, a year-on-year decrease of 57.89%; net profit after deducting non-return to mother was 1,961 billion yuan, a year-on-year decrease of 54.72%.
The domestic market has maintained steady development, and the overseas market continues to receive orders. In the power transmission and transformation industry, the company strengthened its marketing system team building, and the domestic market signed a contract of 40.450 billion yuan in 2023.
In the new energy industry, the company's polysilicon achieved output of 191,300 tons and sales of 202,900 tons; increased efforts to obtain wind and solar resources; completed and confirmed revenue of wind energy and photovoltaic construction projects with installed capacity of about 2.19 GW, and the new energy BOO power plant generated 7.215 billion kilowatt-hours. In the energy industry, the company refined coal market management and optimized market services. In 2023, coal sales exceeded 74 million tons; the company's generators operated steadily, with a cumulative power generation capacity of 17.472 billion kilowatt-hours.
In the new materials industry, the company has achieved sales of 341,000 tons of high-purity aluminum products, 12,000 tons of electronic aluminum foil products, 21.784 million square meters of chemical foil products, 96,500 tons of alloy products, and 630 thousand tons of aluminum products.
In terms of the international market, the company is deeply involved in the stock market, continuously obtains orders in advantageous markets, and develops new markets through various methods. By the end of 2023, the company's complete international transmission and transformation project was executing unconfirmed revenue contracts and pending contract amounts to approximately US$5.3 billion. In 2023, the company signed more than 700 million US dollars in export contracts for power transmission, transformation, inverters and other products.
Product and engineering quality continues to improve steadily, and accelerate the cultivation of new momentum for high-quality development. In terms of product quality, the company's key project products such as Chengdu East 1000kV and Huangshi 1000kV passed the first test in the factory; Baihetan-Zhejiang ±800kV, Fuzhou-Xiamen 1000kV, Zhumadian-Wuhan 1000kV were successfully installed and put into operation; Polysilicon N-type monocrystals achieved batch supply; the yield rate of the new material aluminum foil and the unit rate of electrode foil continued to be stable. In terms of project quality, the company continues to promote standardization of engineering construction and strengthen the information management of the PM platform. The company has accelerated the construction of major strategic projects, and a number of digital projects, such as the distribution network digital factory project and the UHV casing R&D and manufacturing base project, have been put into production one after another. The Zhundong Phase I 100,000 ton project was completed and put into operation. By the end of 2023, the company's polysilicon production capacity reached 300,000 tons/year, and the new energy self-operated power plant connected to the grid was 3,406.95 MW. Projects such as the first phase of the first 4 million ton project for the first mine, the South Open Pit Mine, and the Zhundong 2×660 MW thermal power project have started one after another. The 200,000 ton industrial silicon (phase 1, 100,000 tons) project continues to be built, and the coal and thermal power business is developing collaboratively.
Profit forecasting and valuation
The profit forecast was lowered and the “gain” rating was maintained. The company's polysilicon business is at the forefront of the industry, and the power transmission and transformation business is expected to benefit from the construction of new power systems. Taking into account the uncertainty of profits brought about by fluctuations in polysilicon prices, the company's 2024-2025 profit forecast was lowered. Net profit for 24-25 is estimated to be 86.39 billion yuan and 9.209 billion yuan (107.49 billion yuan and 10.352 billion yuan, respectively before the 24-25 reduction), and the net profit forecast for 2026 is 10.05 billion yuan. The corresponding EPS is 1.71, 1.82, and 1.99 yuan, respectively. The corresponding PE is 8, 8, and 7 times, respectively. Maintain an “Overweight” rating.
Risk warning
The completion progress of the power grid investment fell short of expectations; the construction progress of the project fell short of expectations.