Core views

The company released its report for the third quarter of 2024. 24Q1-Q3 achieved operating income of 58.593 billion yuan, or -37.73% year-on-year, and net profit to mother of -6.505 billion yuan, or -155.62% year-on-year.

The company's Q3 performance was under pressure, but it achieved a month-on-month loss reduction. The loss reduction was mainly due to a significant decline in inventory price depreciation in Q3. The company has a leading BC technology layout, the mass production efficiency of new HPBC2.0 products is up to 24.8%, and the product competitiveness is strong. By the end of 2024, the company's HPBC2.0 products will enter the market on a large scale, which is expected to further enhance the company's competitiveness. The company expects HPBC2.0 to ship 30GW next year. As the company gradually rolls out HPBC2.0, the company's profitability is expected to improve.

occurrences

The company released its report for the third quarter of 2024.

24Q1-Q3 achieved operating income of 58.593 billion yuan, or -37.73% year on year, net profit to mother of -6.505 billion yuan, or -155.62% year on year; after deduction - -6.488 billion yuan, -15.35% year on year.

Looking at the Q3 single quarter, operating income was 20.064 billion yuan, -31.87% YoY, -3. 79%; net profit to mother -1.261 billion yuan, -150.14% YoY, loss reduced month-on-month; after deduction, -12.1.2 billion yuan, -149.37% YoY, loss decreased month-on-month.

Brief review

The company's Q3 performance was under pressure, but losses were reduced month-on-month. Q3 The company achieved net profit of -1.261 billion yuan to mother, -150.14% year over year, reducing losses from month to month. The pressure on the company's third-quarter results was mainly due to: 1) falling prices in the industrial chain, putting pressure on the company's operating performance, while accounting for losses due to falling inventory prices; 2) the decline in shipments in the US high-profit market. The month-on-month loss reduction in Q3 results was mainly due to a significant decline in inventory price impairment in Q3. The Q3 company's asset impairment losses were about 7.7.4 billion yuan, while Q1/Q2 was 2.814/2.97 billion yuan, respectively.

Shipments were adjusted flexibly, and Q3 PV product shipments increased month-on-month. In the first three quarters of 2024, the company achieved 82.80 GW of silicon wafers (including 35.03 GW of external sales), a year-on-year decrease of 4.22%; export sales of monocrystalline batteries 4.16 GW; and module shipments of 51.23 GW (including 13.77 GW of BC modules), an increase of 17.70% year-on-year. Q3's shipments of battery modules and silicon wafers were 38.37 GW and 21.39 GW respectively, both increasing year-on-month.

The company's BC technology leadership layout has achieved a major breakthrough in efficient HPBC 2.0 technology. The mass production efficiency of the company's new HPBC2.0 products is up to 24.8%, the 2382 version has a maximum power of 670W, and the product competitiveness is strong. By the end of 2024, the company's HPBC2.0 products will enter the market on a large scale. The company expects HPBC2.0 to ship 30 GW next year, which is expected to increase the company's profitability. According to the plan, the company's BC production capacity will reach 70 GW by the end of 2025 (of which 2.0 production capacity is 50 GW), and all domestic battery bases plan to migrate to BC products by the end of 2026. At that time, BC production capacity will reach 100 GW.

Shipments to the US market are expected to gradually resume. Q1-Q3 shipped 1.6 GW to the US market, a year-on-year decline. The company's 5GW module factory in the US is currently still climbing. It is expected that subsequent shipments to the US market will resume, which is expected to increase the company's performance.

The cost rate declined year-on-year during the period, and the management fee rate continued to decline. The company's expense ratio for the Q3 period was 9.3%, -0.6 pct year over year and +0.9 pct month over month. Q3 The company's management expense ratio was 3.4%, down 1.6 pct year on year and 0.3 pct month on month. Furthermore, the company's Q3 net profit margin was -6.37%, up 7.53pct month-on-month, improving month-on-month.

Profit forecast: We expect the company's 2024-2026 net profit to be 7.53/3.86/5.35 billion yuan, and the 2025-2026 PE valuation corresponding to November 14, 2024 will be 37.7/27.2 times. The bottom of the PV industry cycle has arrived. By the end of 2024, the company's HPBC 2.0 production capacity will be put into operation, which will gradually increase next year. It is expected to further enhance the company's competitiveness, bring in a certain amount of excess profits, and maintain the “gain” rating.

Risk analysis

1. The risk that industry demand falls short of expectations. The company's business covers many links in the photovoltaic industry chain. If the industry's growth rate falls short of expectations, it will have a major negative impact on the company's photovoltaic module, silicon wafer, power plants, and contract processing businesses. 2. HPBC's efficiency improvement and cost reduction fell short of expectations. HPBC is one of the company's differentiating products and has certain advantages in terms of profitability. If the company's HPBC efficiency improvement and cost reduction fall short of expectations, then the company's profitability and product competitiveness will be adversely affected. 3. The risk that the project progress falls short of expectations. The company has many production expansion projects, and after the integrated production capacity is put into operation, it will bring a certain increase in the profit of the company's integrated components. If the progress of the company's projects falls short of expectations, then the company's shipment volume and profitability will be greatly affected.