The company announced 2023 and 2024 Q1 results. In 2023, the company achieved operating income of 59.146 billion yuan, -11.74% year-on-year; net profit to mother was 3.416 billion yuan, or -49.9% year-on-year. Among them, 23Q4 achieved operating income of 10.492 billion yuan, or -38.87% YoY, -23.73%; net profit to mother was 2.772 billion yuan, -252.48% YoY and -267.84% YoY. The 24Q1 company achieved operating income of 99.33 billion yuan, -43.62% YoY, -5.33%; net profit to mother - 880 million yuan, -139.05% YoY and -68.26% YoY, mainly due to continued decline in industrial chain prices and large asset impairment amounts.
Silicon wafer shipments grew rapidly, and the component business fell short of expectations. In '23, the company shipped 114 GW of silicon wafers, +68% year-on-year, with a market share of 23.4%. N-type and large-size (210 series) products were shipped 75GW, accounting for 66%; N-type market share was 36.4%, maintaining the first export market share; module shipments were 8.6GW, +29.8% compared to the same period last year. In 24Q1, the company shipped 34.95 GW of silicon wafers, +40% compared with the same period, and shipments of N-type and large-size (210 series) products reached 88%. Among them, N-type 210 had an export market share of more than 90% and continued to maintain a leading position; the company shipped 1.6 GW of modules, +6.8% over the same period last year. In 24Q1, the company's gross margin fell 1.38pct to 5.56%, and profit levels continued to be under pressure.
Asset impairment affects the company's short-term profits. In '23, as Maxeon's stock price continued to fall, the company confirmed a large amount of impairment on long-term equity investments and financial assets related to Maxeon, which had a total negative impact of $1.69 billion on the 23-year results, including asset impairment losses of $1.01 billion, fair value change losses of $340 million, investment losses of $340 million, and interest income on convertible bonds of $108 million. In 24Q1, the company accrued asset impairment losses of 500 million yuan.
The pace of expansion of silicon wafer and battery production capacity is slowing down. The company continues to improve its flexible manufacturing capabilities, and its products develop into N-type high-power and high-efficiency products. By the end of '23, PV single crystal production capacity reached 183 GW and module production capacity reached 18 GW. On May 23, the company announced that it would reduce the capital it plans to raise for fixed increase projects from an initial amount of 13.8 billion yuan to 4.9 billion yuan. Among them, the scale of the 35GW silicon wafer project remains unchanged; the proposed capital raised will be reduced to 3 billion yuan; TopCon battery production capacity will be halved to 12.5 GW, and the proposed capital raised will be reduced to 1.9 billion yuan.
Profit forecast and investment advice: Considering that the company's profit continues to be under pressure due to the large decline in prices in the industrial chain combined with asset impairment, we expect the company's net profit to be 29.54 (-73%)/32.62 (-72%)/36.52 billion yuan in 24/25/26, respectively. The company has a stable position as a leader in silicon wafers in the world, and has significant manufacturing process advantages. The company was given 16 times PE in 2024 (originally 13 times PE in 2023), and the target price was reduced by 55% from 26.00 yuan to 11.68 yuan, maintaining the “superior to the market” rating.
Risk warning: increased competition in the industry; falling prices in the industrial chain; slowing industry demand, etc.