Results were high in '23, and 24Q1 profits fluctuated due to multiple factors. In 2023, the company achieved operating income of 81,556 billion yuan, a year-on-year increase of 11.74%, net profit of 7.039 billion yuan, a year-on-year increase of 27.21%, after deducting non-net profit of 7.140 billion yuan, a year-on-year increase of 28.46%; in 24Q1, the company achieved operating income of 15.971 billion yuan, a year-on-year decrease of 22.02%, net profit of 483 million yuan, a year-on-year decrease of 118.70%, after deducting non-net profit of 369 million yuan, a year-on-year decrease of 114.81%, gross profit margin of 5.06% month-on-year 8.17pct According to the “Investor Relations Activity Record Form April 30, 2024”, the gross profit changes in the first quarter were mainly due to: a sharp drop in component prices starting in the second half of '23; 2. The company's N-type production capacity was released centrally in the fourth quarter of '23, which required high proficiency requirements for process technology and personnel; 3. Preparation for large inventory price drops was made in the first quarter, and all share payment fees were accelerated in the first quarter.
Overseas and N-type products account for a high proportion of shipments, and are expected to maintain a good trend in the second quarter. 2024Q1, the company continues to increase its global market layout, giving full play to its global marketing service network advantages and brand advantages. The battery module shipment volume is 16.059 GW (including 528 MW for personal use), of which overseas module shipments account for about 62%, the distribution volume accounts for about 29%, and N-type modules are shipped 6.6 GW, accounting for 46.6%.
According to the “Investor Relations Activity Record Form” on April 30, 2024, the shipment target for the second quarter is between 20-23 GW, with N-type products accounting for about 70%.
New N-type production capacity is being launched one after another, and new battery technology is being actively developed. The company accelerated the construction of N-type battery production capacity, and the 57GW N battery project was put into operation one after another. By the end of 2023, the module production capacity was 95 GW, and the production capacity of silicon wafers and batteries reached about 90% of the module production capacity. According to the company's production capacity plan, the degree of production capacity integration will be further increased in 2024, with production capacity exceeding 100 GW in all areas. The conversion efficiency of mass-produced N-type Bycium+ (Bycium+) batteries has reached 26.3%. The R&D center actively researches and reserves cutting-edge technologies such as various full-back contact batteries, perovskite, and laminated batteries to maintain core competitiveness.
Adopt a “profit first” order acceptance strategy to dig deeper into global market needs. According to the “Investor Relations Activity Record Form April 30, 2024”, there is a consensus that the industry is currently at the bottom. The global market continues to grow every year. The company will maintain the “profit first” order acceptance strategy, focus on cash flow and avoid losses, and seek a balance between operating rate and production. In '24, the company will further expand the global market, with a target component shipment volume of 85-95 GW.
Profit forecasting and investment advice. In 2024-2026, we expect the company's net profit to be 31.97/44.07/6.386 billion yuan, up -54.6%, 37.8%, and 44.9% year-on-year, corresponding EPS 0.97, 1.33, and 1.93 times, respectively. Referring to the average PE value of comparable companies, we gave the company 17-19 times PE in 24 years, with a corresponding reasonable value range of 16.42-18.35 yuan. For the first time, coverage gave a “superior to the market” rating.
Risk warning: Industry demand is declining, competition is intensifying, policy risks, and the expansion of new technology falls short of expectations.