Key points of investment
Integrated component leader to create a differentiated competitive advantage. The company has been based in the photovoltaic industry for more than 20 years, focusing on scientific and technological innovation, steady operation, forming an integrated and global production capacity layout, and focusing on upgrading and iterating BC technology to create a differentiated competitive advantage. Revenue in 2023 was $129.498 billion, up 0.39%; net profit to mother was $10.751 billion, down 27.4%; net profit not attributable to mother was $10.834 billion, down 24.84% from the same period.
Prices fluctuated and shipments contracted, putting pressure on overall profits. In 2023, the company shipped 125.42 GW of silicon wafers (export sales 53.79 GW), with a year-on-year increase of 47.45%, ranking first in the world's monocrystalline silicon wafer shipments for nine consecutive years; 5.90 GW of batteries; 67.52 GW of module shipments (66.44 GW), an increase of 44.40% year on year. HPBC shipped 5.95gw; due to the 2023H2 industry price reduction, HPBC's profit fluctuated with the spot market and was not as good as PERC for the time being. Shipments of 2024Q1 silicon wafers were 26.74 GW (export sales 12.43 GW), up 12.26%, profit loss; battery export sales were 1.51 GW; module shipments were 12.89 GW (12.84 GW, HPBC shipments 4.75 GW), the same increase of 16.55%. In 2024Q1, inventory depreciation was $2,649 million and fixed asset depreciation was $152 million due to falling industry prices. Under the industry's low price bidding trend, the company adopted a relatively conservative price strategy, causing shipments to shrink.
Global production capacity layout, active reserves of new technologies. By the end of 2023, the company's silicon wafer/battery/module production capacity was 170/80/120 GW, and projects such as Malaysian 2.8 GW modules and Vietnam's 3.35 GW battery were gradually put into operation on schedule, and construction of the 6.6 GW silicon rod project in Malaysia progressed in an orderly manner. In terms of new technology:
Newly developed Terry silicon wafers use a new TrCz crystal drawing process to greatly improve the uniformity of silicon wafers. The company expects mass production in 2024Q2; the company set double material championship records for back-contact silicon heterojunction solar cells (HBC) efficiency of 27.09% and silicon-perovskite laminated batteries with 33.9% efficiency, and also developed HPBC II (TPC with high power of 5% or more) to launch products. In terms of hydrogen energy, a new ALK Hi1 series product was released, DC power consumption for hydrogen production was reduced to 4.0 kWh/Nm3, and the industry's first single-tank 3000 Nm3/h alkaline electrolyzer was launched.
Cash on hand is sufficient, and operating cash is under pressure. During 2023, expenses also increased by 42% to 8.036 billion, and the cost ratio increased by 2.71 pct to 6.21% during the period, mainly due to the increase in management expenses due to the expansion of the scale of operations and the increase in the number of employees. The net operating cash inflow in '23 was 8.117 billion yuan, down 66.69%; 2024Q1 operating cash outflow was 4.889 billion yuan, an increase of 3.6 billion yuan. Competition intensified, and operating cash was under pressure.
Profit forecast and investment rating: Based on increased competition in the industry and profit pressure on the entire industry chain, we lowered the company's profit forecast for 2024-2025 and added a profit forecast for 2026. We expect net profit from 2024-2026 to be 35.60/85 billion yuan (the value was 13.0151 billion yuan), -68%/73%/42% year-on-year, corresponding to 41/24/17 times the current PE. Considering the company's leading position in the industry and sufficient reserves of new technology, we maintain a “buy” rating.
Risk warning: Policies fall short of expectations, and competition intensifies.