Description of the event

The company released its report for the third quarter of 2024. In the first three quarters of 2024, it achieved revenue of 1.44 billion yuan, +25.05% year on year; realized net profit of 0.383 billion yuan, +12.95% year on year; and realized net profit of 0.354 billion yuan without return to mother, +7.99% year on year. Based on this calculation, 2024Q3 achieved revenue of 0.535 billion, +11.86% year on year; realized net profit of 0.147 billion yuan, -10.84% year over year; realized net profit of 0.129 billion yuan without return to mother, or -19.47% year on year.

Incident comments

The company has steadily promoted acceptance and achieved relatively rapid revenue growth. However, due to the high net profit base due to the high net profit base for the same period last year combined with the company's prudent calculation of impairment losses, the 24Q3 performance declined. Currently, it seems that the company has plenty of orders, and TopCon's SE, LIF and BC new technology equipment continues to be received. The company's contract debt of 1.707 billion in Q3 2024 remains at a historically high level. At the same time, the company issued the “Notice on Accruing Credit Impairment Preparation and Asset Impairment Preparation for the First Three Quarters of 2024”. In the first three quarters of 2024, the company accrued a cumulative credit and asset impairment loss of about 76.19 million, of which 24Q3 accrued about 35.17 million, reflecting the full and reasonable consideration of impairment risks existing in current accounts receivable and inventory, which had a certain impact on current results.

Gross margin showed slight quarterly fluctuations, and net profit margins declined year-on-year due to depreciation. The company's gross margin for the first three quarters of 2024 was 48.29%, -0.49pct year on year; achieved a net profit margin of 26.63%, -2.85pct year on year; the cost ratio for the period was -0.53 pct year on year, a slight improvement. Among them, the gross margin of the 2024Q3 company was 48.68%, -0.91 pct year on year. Due to impairment charges, the company's net interest rate was -7.02 pct year over year, but in reality, the 24Q3 company's expense ratio was -0.8 pct year over year, and cost control was optimized. At present, the company has received orders for BC technology one after another. The value of a single GW is expected to increase significantly, and subsequent inspections may drive the continuous optimization of the company's profitability.

Currently, equipment orders in the photovoltaic industry are under pressure due to the slowdown in TopCon production expansion, but due to the expansion of BC's new technology and the increase in the value of a single GW laser, the company is expected to be more resilient in receiving new orders. Recently, the company announced that it has signed a major 1.23 billion (tax excluded) contract with a leading downstream photovoltaic company. This is the laser process for the new XBC battery. Following the company's TopCon process LIF equipment in the first half of this year, significant progress has been made in the new XBC laser process. In addition, the company has a layout in TopCon's SE, LIF and laser transfer, copper electroplating graphics processes, laser welding, etc., and has a monopoly or leading position in the industry in many technology routes. Currently, leading downstream manufacturers have announced that they will build 70 GW of BC production capacity next year. By the end of 2026, they plan to switch all domestic battery production capacity to BC products. In addition, Aixu Co., Ltd. also has a BC production capacity layout. It is expected that BC's subsequent expansion will continue to be implemented.

The company further expanded into the field of electronic semiconductors. TGV laser microporous equipment is used in semiconductor chip packaging, display chip packaging and other fields. 2024H1 has completed the shipment of panel-level glass substrate through-hole equipment, achieving full coverage of wafer-level and panel-level TGV packaging laser technology. TGV technology is on the rise in semiconductor applications and is expected to be a driving force for new orders.

Maintain a “buy” rating. The company is expected to achieve net profit of 0.553 billion and 0.755 billion in 2024-2025, and the corresponding PE is 41x and 30x, respectively.

Risk warning

1. The promotion of the company's new technology products fell short of expectations;

2. The acceptance of the company's new technology orders fell short of expectations.