Incidents:

On February 24, the company released the 2024 performance report.

In 2024, the company achieved revenue of 12.514 billion yuan, +21.61% YoY; net profit to mother 0.419 billion yuan, -5.24% YoY.

Opinions:

In 2024, the company's net profit to mother was -5.24% YoY, net profit after deducting non-return to mother +0.24% YoY.

Competition in the company's downstream photovoltaic cell sector has intensified, and the photovoltaic industry has entered a reshuffle stage. Some customer repayments fall short of expectations. The company comprehensively determines the risk of recovering accounts receivable and carefully accounts for related bad debts and losses, which affects some profits.

The world's leading photovoltaic silver paste, with a new silver powder production capacity of 3,000 tons. The company's main product is photovoltaic conductive silver paste. In 2023, the company's global market share of photovoltaic conductive silver paste reached 34.40%, ranking first in the industry. Furthermore, the company continues to deploy upstream. The newly established fund-raising project is expected to invest 1.2 billion to build a “high-end photovoltaic electronic material base project” in Changzhou. After completion, the project will have the capacity to produce 3,000 tons of electronic-grade silver powder per year.

Silver-free photovoltaics is advancing at an accelerated pace, and copper paste opens up room for growth. With its long-term accumulated material and formulation design capabilities, the company closely follows battery technology trends to drastically reduce the body resistance and silver content of HJT silver-coated copper paste products, achieve mass production of low-cost slurries containing less than 30% silver, and significantly improve the long-term reliability of the slurry.

Profit forecast and investment rating: The company is a global leader in photovoltaic silver paste, closely following the requirements of new technology changes in the photovoltaic industry to reduce costs and increase efficiency of silver paste materials. The company's net profit for 2024-2026 is estimated to be 0.419/0.675/0.797 billion yuan, respectively, and the current stock price corresponding to 2024-2026 PE is 29.3/18.2/15.4 times, respectively. We selected Dike Co., Ltd., Boqian New Materials, Follett, and Foster as comparable companies. The average PE value of comparable companies in 2024-2026 was 40.8/25.2/19.3 times, and the company's current valuation is reasonable. Covered for the first time, a “gain” rating was given.

Risk warning: risk of changes in industry policy; risk of changes in downstream demand; increased industry competition; technological progress falling short of expectations; risk of fluctuations in raw material prices; risk of revenue confirmation falling short of expectations.