Event: on October 25, 2023, the company released its third quarterly report of 2023. In the first three quarters of 2023, the company achieved operating income of 544 million yuan, an increase of 4.83% over the same period last year, a net profit of 186 million yuan, an increase of 15.49% over the same period last year, and a deduction of 179 million yuan for non-net profit, an increase of 11.30% over the same period last year.

In a single quarter, the company's revenue and net profit decreased compared with the same period last year. The company's 23Q3 realized operating income of 212 million yuan, down 5.45% from the same period last year; realized home net profit of 77 million yuan, down 4.87% from the same period last year; and realized 75 million deduction of non-net profit, down 6.34% from the same period last year.

The profitability is flat and the cost control is good.

In terms of profitability, the gross profit margin of 23Q3 was 61.67%, which decreased 0.96Pct compared with the same period last year, and the net profit rate was 36.14%, an increase of 0.22Pct over the same period last year. In terms of cost control, the company's expense rate during the first three quarters of 2023 was 19.46%, a year-on-year decline in 2.07Pcts.

Weather factors superimposed electricity price reduction, affecting the company's Q3 photovoltaic power generation revenue.

With the steady expansion of the company's self-owned power station, the company's photovoltaic revenue and gross profit increased in the first three quarters of 2023 compared with the same period last year. Among them, the revenue of photovoltaic power generation of Q3 company decreased slightly compared with the same period last year, mainly due to:

1) the number of hours of photovoltaic utilization decreased. Due to the influence of overcast, rainy and typhoon weather, the equivalent hours of photovoltaic power generation decreased by 41 hours compared with the same period last year.

2) the price of electricity decreases. The phenomenon of power shortage was alleviated compared with the previous year, the profit and loss allocation of power transactions decreased accordingly, and the price of photovoltaic electricity decreased, resulting in a reduction of 0.02 yuan per kilowatt-hour in the comprehensive electricity revenue of Q3 compared with the same period last year.

The company issues 880 million convertible bonds, which is expected to expand the scale of the company's power plant operation.

On October 24, the company announced that it intends to issue 880 million convertible bonds, of which 616 million will be used for distributed photovoltaic projects (a total of 723 million yuan). The total scale of distributed photovoltaic projects is about 166.26MW, and the project is implemented in Zhejiang Province, Jiangsu Province, Guangdong Province, Hubei Province, Anhui Province and Tianjin City, with a total number of 55 projects and a construction period of one year. After the completion of the project, the operation scale of the company's power station will be expanded, which is expected to promote the company's performance.

Investment advice: benefiting from the background of the general trend of distributed energy development, the company's business model has obvious advantages. With the subsequent landing of convertible bond investment projects, the scale of the company's self-owned power station will continue to expand, and the scale of photovoltaic business is expected to continue to increase. In addition, the company's layout of charging piles, industrial and commercial energy storage, household energy storage and other businesses are expected to build new profit growth points. We estimate that the company's revenue from 2023 to 2025 will be 7.28,9.06 and 1.092 billion yuan respectively, with corresponding growth rates of 12.1%, 24.5% and 20.4%, respectively, and the corresponding net profit will be 2.31,3.16 and 394 million yuan respectively, with corresponding growth rates of 20.8%, 36.4% and 24.9% respectively. Based on the closing price on October 25, the corresponding PE for 2023-2025 is 26x, 19x and 15x. Maintain the recommended rating.

Risk Tip: raw material prices fall risk, market development is not as expected.