The company announced results for the first quarter of 2024. 2024Q1 achieved revenue of 3.644 billion yuan, +135.38% year over month, +3.95% month on month; realized net profit of 176 million yuan, +103.71% year on month, +89.01% month on month; realized deducted non-net profit of 194 million yuan, +143.45% year over year, and +102.39% month on month.
Shipments of N-type silver paste are growing rapidly, and the share of shipments continues to rise. 2024Q1, the company's PV conductive silver paste shipment volume was 569.94 tons, +96.9% year-on-year, with a slight decrease from month to month. Among them, N-type TopCon silver paste shipments were 493.17 tons, accounting for a sharp rise to 86.5% of the company's photovoltaic conductive silver paste products. 2024Q1, the company's gross margin was about 10.65%, a slight decrease from month to month.
N-cell penetration increased to 65% in March, according to Infolink data. Looking ahead to 2024, the company expects PV silver paste shipments to reach 2500-3000 tons, an increase of 46% + over the previous year, and the share of N-type silver paste shipments will continue to increase. Combined with the gradual introduction of LECO, it is expected to drive high revenue and profit growth.
LECO technology has been gradually introduced, and product development efforts have continued to be strengthened. Since 2023Q4, LECO technology has gradually been introduced downstream of the industry. Currently, LECO has basically become the standard technology for TopCon batteries. Industry barriers and technical thresholds have been raised, and the company has an early layout in LECO silver paste and is in a leading position in the industry, and is expected to be the first to enjoy industry dividends. 2024Q1, the company's R&D expenses reached 110 million, an increase of 201% over the previous year. In terms of product innovation in the photovoltaic field, the company has excellent performance in low-temperature silver paste and silver-coated copper paste products for N-type HJT batteries, and has achieved large-scale mass production and delivery. In addition, new IBC silver paste products are continuously supplied and delivered, and product performance is in a leading position in the industry.
Actively promote the investment and construction of silver nitrate projects and continue to deepen the industrial layout. In 2023, the company announced plans to build a production capacity of high-performance electronic materials such as 5,000 tons of silver nitrate and 1,800 tons of metal powder per year, with a total investment of about 400 million yuan. Currently, the company expects the silver nitrate project to be completed and put into operation by the end of 2024. The construction of this project will guarantee the safety and stability of the supply chain, while also helping to reduce raw material costs, which is expected to boost the company's overall profit level.
Valuation forecasts and investment suggestions: The rapid expansion of the company's TopCon products combined with the gradual introduction of LECO technology is expected to drive the company's profit level to grow. We expect the company's 2024-2026 revenue to be 139.75/157.64/17.977 billion yuan, with net profit of 6.40 (+3%) /7.84 (+1%) /9.10 (+1%) billion yuan. We will continue to give the company 16 times PE in 2024. The target price will increase 2.8% from 70.84 yuan to 72.80 yuan, maintaining the “superior to the market” rating.
Risks: Demand for silver paste falls short of expectations; technological development falls short of expectations; risk of fluctuations in raw material prices, etc.