Core views

The company released its 2024 three-quarter report. The 2024Q3 company achieved revenue of 6.369 billion yuan in a single quarter, -53.70% YoY, +1.40% month-on-month, and realized net profit to mother -2.998 billion yuan, -281.50% YoY, and -37.27%. The pressure on the company's third-quarter results was mainly due to the bottom of prices in the industry chain and the impairment of 0.789 billion yuan in assets accrued by the Q3 company. In the first three quarters, the company shipped about 94.86GW of silicon wafers, an increase of 11.4% over the previous year. Q3 The company's gross margin was 23.38%, -7.1pct/-7.4pct month-on-month, respectively, mainly due to the impact of industrial chain prices. Follow up on the company's progress in building a 20GW silicon wafer production capacity in Saudi Arabia.

occurrences

The company released a three-quarter report

The company released its 2024 three-quarter report. 2024Q1-Q3 achieved operating income of 22.582 billion yuan, a year-on-year ratio of -53.59%, a net profit attributable to mother of -6.051 billion yuan, a year-on-year ratio of -197.95%, and realized net profit deducted from non-mother of -6.922 billion yuan, or -230.39% year-on-year.

Brief review

The bottom of prices in the industrial chain and the impairment of accrued assets are dragging down performance

Looking at the single quarter, the 2024Q3 company achieved operating income of 6.369 billion yuan, -53.70%, +1.40% month-on-month, realized net profit to mother -2.998 billion yuan, -281.50% year-on-year, -37.27% month-on-month, and realized net profit without return to mother of -3.433 billion yuan, -328.85% year-on-year, and -40.11% month-on-month. The company's third-quarter results were under pressure, mainly due to the bottom of prices in the industry chain and the impairment of 0.789 billion yuan in assets accrued by the Q3 company.

By business, ① Silicon wafer business: Q3 Company's silicon wafer business was affected by product prices and inventory, and total losses increased. In the first three quarters, the company shipped about 94.86GW, up 11.4% year on year. The silicon wafer market share was 19.2%, ranking first in the industry. In terms of production capacity, the company's photovoltaic monocrystalline production capacity increased to 190 GW. The N-type product achieved a single monthly production of about 505 kg, and the number of sheets produced per kilogram was about 1 second-best in the industry.

② Battery module business: The new energy battery module business sector continued to lose money due to the bottom of the Q3 industrial market price cycle. In terms of production capacity, as of the end of September 2024, the company's production capacity for high-efficiency tiled components reached 24 GW.

③ Global business: 1) Maxeon: Both performance and stock prices fell sharply during the reporting period, leading to an increase in the company's losses. Maxeon's 3GW battery module expansion project in North America is progressing slower than expected. 2) The company has reached cooperation with RELC and Vision Industries, wholly-owned subsidiaries of the Saudi Arabian Public Investment Fund (PIF), to jointly establish a 20GW silicon wafer project.

Financial aspects: ① The Q3 company calculated asset impairment of 0.789 billion yuan, mainly to prepare for inventory price declines. In the first three quarters of 2024, the company raised a total of 2.397 billion yuan in inventory prices to reduce prices. ② Gross margin is under pressure due to industrial chain prices. Q3 The company's gross margin was 23.38%, -7.1pct/-7.4pct month-on-month, respectively, mainly due to the impact of industrial chain prices. ③ The company's expense ratio increased year-on-year in the third quarter. The company's expense ratio for the Q3 period was 17.2%, +10pct/month-on-month, respectively. This was mainly due to the company's management expense ratio and financial expense ratio +5pct and +4.4pct year-on-year. ④ The company's operating cash flow improved in Q3. Q3 Net cash flow from operating activities was $2.433 billion, +240.8% /month-on-month, respectively.

Profit forecast: The company's net profit for 24-26 is estimated to be -6.61/1.61/2.22 billion yuan, respectively, and the PE for 2025/2026 corresponding to November 14 is 28.3/20.5 times. The company is a silicon wafer leader. Performance was under pressure in 24 due to the impact of the bottom price of the industry chain. With marginal improvements in industry supply and demand in 25 years, industrial chain prices are expected to return to normal levels, and the company's profitability is expected to recover and maintain an “gain” rating.

Risk analysis

1. The risk that industry demand falls short of expectations. The company's business is mainly in photovoltaic silicon wafers. If the industry's growth rate falls short of expectations, it will put some pressure on the company's profit per watt of silicon wafers. 2. The company faces a certain risk of loss due to Maxeon's loss of performance and falling stock prices. As a subsidiary of the company listed on the US stock market, Maxeon's performance has continued to lose money over the past few years, and its stock price has continued to fall, which may have a negative impact on the company's performance. 3. The risk of increased pressure on cash flow. Currently, the vast majority of companies in the silicon wafer industry are losing cash. As of the end of the third quarter, the company's long-term loans were 42.7 billion yuan. If the industry continues to be at the bottom of the cycle, the company may face a certain amount of cash pressure.