The company predicts a 54%-81% year-on-year increase in net profit to mother in 2023
The company announced its 2023 performance forecast: net profit due to mother is expected to be 290 to 340 million yuan, up 54.23%-80.83% year on year, and net profit without deduction is estimated to be 258-308 million yuan, up 67.41%-99.92% year on year, in line with our expectations.
Key points of interest
The photovoltaic business is growing rapidly, and overseas production expansion is expected to strengthen market competitiveness. In 2023, we expect the company to gradually release production capacity following the previous fixed capital increase, maintain high growth on the shipping side, and drive a significant increase in revenue and profit.
In 2024, we expect that the company's PV frame shipments will continue to grow by more than 20% in line with industry demand, and expanding overseas production capacity will help further increase the company's share. According to the announcement, the company's projects in Malaysia and Vietnam have all begun to be implemented, with a planned production capacity of 120,000 tons of photovoltaic aluminum frames plus 120,000 tons of recycled aluminum.
We believe that the company has now established good cooperative relationships with leading component manufacturers. Production capacity in Vietnam and Malaysia will help the company obtain orders from Southeast Asian component manufacturers nearby and further enhance overseas competitiveness.
The advantages of fixed capital increases and landing capital are outstanding, and recycled aluminum production capacity is gradually freeing up and optimizing costs. In January 2024, the company's fixed increase was successfully issued, raising about 869 million yuan in net capital, mainly for the company's annual production of 600,000 tons of recycled aluminum projects, digital construction projects, and supplementary working capital. We believe that the PV frame chain has certain working capital barriers. As the first listed company in the sector, the company continues to use its financial advantages to expand faster than its peers. In the area of recycled aluminum, the company expects to start production in batches in 2024, with an annual output of 250,000 tons. We are optimistic that the company will gradually introduce self-produced recycled aluminum to optimize raw material procurement costs and increase profits.
The second curve continues to climb, and NEV zero is expected to contribute to increased performance. In the field of new energy vehicle parts, the company has already put into operation the first phase with a production capacity of 50,000 tons. Currently, it continues to develop mainstream customers in the industry. According to the announcement, it has obtained targeted development projects from some OEMs. We expect that the single-ton value and profitability of NEV parts are expected to be higher than that of photovoltaic aluminum frames, and with the implementation of customer demand projects, shipments in 2024 are certain, and we are optimistic about the second growth curve of the company's strategic layout to achieve long-term high performance growth.
Profit forecasting and valuation
Keeping the industry rating and 2023E net profit unchanged, we are optimistic that the company's main photovoltaic aluminum frame business will continue to grow with the expansion of downstream demand, while the cost side is expected to be stable and profitable through process optimization. Furthermore, the horizontal and vertical expansion of recycled aluminum and new energy auto parts is expected to contribute to performance growth starting 2024, increasing 2024E net profit 15% to 502 million yuan, and introducing 2025E net profit of 703 million yuan. The current stock price corresponds to 2024 12x P/E, with a target price of 14% to 45 yuan, corresponding to 2024 xP/ E, there is 37% upside compared to the present.
risks
Competition in the industry intensified, project progress fell short of expectations, and downstream demand fell short of expectations.