Core views

The company released its report for the third quarter of 2024. 24Q1-Q3 achieved operating income of 8.202 billion yuan, or -42.96% year on year, and net profit to mother of -0.417 billion yuan, or 125. 45% year on year.

In the first three quarters of 2024, the company shipped 26.45 GW of batteries, up 35.29% year on year, with N-type batteries shipped 23.70 GW. The company's share of overseas sales continued to increase in the third quarter, and the company's production capacity in Oman is expected to be put into operation in 25 years. The company is leading N-type and TopCon battery technology to promote preparations for mass production of TBC batteries. As the company's share of overseas sales continues to increase, production capacity in Oman is gradually put into operation, and the company's profitability is expected to recover.

occurrences

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

24Q1-Q3 achieved operating income of 8.202 billion yuan, 42.96% YoY; net profit attributable to mother was -0.417 billion yuan, or -125.45% YoY; net profit not attributable to mother was -0.735 billion yuan, or -146.74% YoY. In Q3, the company's revenue in a single quarter was 1.828 billion yuan, -63.14%, or -31.27%; net profit to mother -0.251 billion yuan, -136.69% YoY, -34. 62% month-on-month; net profit without return to mother -0.345 billion yuan, -153.91% YoY and -57.15%.

Brief review

The decline in prices in the industrial chain is dragging down performance. The company achieved net profit to mother of -0.251 billion yuan in the third quarter, -136.69% year-on-year, mainly due to a decline in industrial chain prices and a decline in the company's operating performance.

All N-type high-quality assets, leading the battery technology level and operating rate in the industry. Battery products were shipped 26.45 GW in the first three quarters of 2024, up 35.29% year on year; of these, N-type batteries were shipped 23.70 GW, accounting for 89.60%. The company currently has a production capacity of 40GW full N-type batteries, with an operating rate of about 70%, leading the industry; P-type production capacity was completely shut down in June, and the impairment of related equipment assets has been calculated for 23 years. In the first half of 2024, the company ranked second in the world in battery product shipments. Among them, N-type battery shipments remained number one in the world.

Overseas sales channels are gradually being opened up, and production capacity in Oman is expected to be put into operation in 25 years. The company's 24Q1 overseas sales account for 11.6%, 24Q2 overseas sales account for 17%; 24Q3 overseas sales account for about 35%, and is expected to account for about 30% for the whole year. The company's overseas sales channels have covered Asia, Europe, North America, Latin America and Australia, among which India has the largest share of the N-type market. The first 5GW project in Oman is expected to be completed and put into operation in 25 years, and the company is expected to reap excessive profits due to the scarcity of batteries overseas.

Lead the development of TopCon battery technology and continue to promote preparations for mass production of TBC batteries. The company TopCon technology is leading. The conversion efficiency of the company's pilot TBC production line is 1-1.5pct higher than that of mainstream N-type batteries, and the company continues to push ahead with preparations for mass production of TBC batteries. Furthermore, the efficiency of the company's pre-research perovskite laminated battery laboratory can reach 29.03%.

Profit forecast: As the company's share of overseas sales continues to rise, industrial chain prices are expected to gradually return to a reasonable level next year, and the company's profitability is expected to recover. The company is expected to achieve net profit of 0.5, 1, and 1.31 billion yuan respectively in 2024-2026, and PE 15.2 and 11.6 times higher for 2025/2026 on November 14, maintaining an “increase in holdings” rating.

Risk analysis

1. The risk that industry demand falls short of expectations. The company's business is mainly in photovoltaic cells. If the industry's growth rate falls short of expectations, it will put some pressure on the company's single-watt battery profit. 2. The risk that overseas production expansion projects fall short of expectations. The company's Oman battery project mainly supplies high-premium overseas markets. Subsequent commissioning will have a big impact on the company's profit in 25-26. If the project's commissioning progress falls short of expectations, it will also cause profit risks. 3. The risk that non-silicon costs will rise due to rising silver prices. Among the non-silicon costs of TopCon batteries, the cost of silver paste is relatively high. The sharp rise in silver prices since the second quarter has led to an increase in non-silicon costs. If silver prices rise further in the future, it will lead to a further increase in the company's costs.