Event: The company released its annual report for 2023 and the report for the first quarter of 2024. The company achieved revenue of 81,556 billion yuan in 2023, +11.74% year-on-year; realized net profit to mother of 7.039 billion yuan, +27.21% year-on-year. Within 2024Q1, the company achieved revenue of 15.971 billion yuan, or -22.02% year-on-year; realized net profit to mother of 483 million yuan, or -118.70% year-on-year. Affected by the rapid decline in prices in the photovoltaic industry chain, the company, as a leading integrated manufacturer, is currently under pressure on both revenue and profit.
Integrated components: New technology continues to advance, aiming at cost reduction LCOE. By the end of 2023, the company's photovoltaic module production capacity was 95 GW, and the production capacity of silicon wafers and batteries reached about 90% of the module production capacity. Among them, the production capacity of n-type batteries exceeded 57 GW. The degree of upstream and downstream compatibility was far higher than that of other leading companies, and it had the advantage of integrating the entire industry chain. In addition, in 2023, the company released DeepBlue 4.0 Pro, a new n-type component product based on a new generation of 182mm*199mm rectangular silicon wafers, superimposing high-efficiency n-type passive contact Bycium+ battery technology, SMBB technology, etc., the battery open circuit voltage (Voc) is as high as 733mV, and the battery mass production conversion efficiency exceeds 26%. Under different application scenarios, different project types, and different installation methods, compared with P-type components, DeepBlue 4.0 Pro components can reduce BOS costs by about 2%-4.5%, and LCOE can be reduced by about 2.5%-6%. Compared with the original version of N-type components, the overall LCOE can be reduced by about 0.7%-1.6%.
Overseas advantage: The gross margin of the American market is high, and overseas development is still a top priority. In 2023, overseas component sales accounted for about 53%. Among them, American component exports contributed 13.57 billion yuan in revenue, and gross margin reached 36.56%, which was significantly higher than domestic sales. In terms of production capacity layout, we will further deepen the global layout and consolidate leading advantages through the promotion of production capacity of 5GW batteries in Vietnam and 2GW components in the US.
In the future, we judge that overseas markets will still be an important development direction for the company and the main fulcrum for profit.
Repurchase company shares and establish a long-term incentive mechanism. The company disclosed in its 2023 annual report that it plans to use no less than RMB 400 million (inclusive) and no more than RMB 800 million (inclusive) to repurchase the company's shares, and that all of the repurchases will be used for employee stock ownership plans or equity incentives. As of December 31, 2023, the company bought back 12,483,600 shares of the company through centralized bidding transactions through the Shenzhen Stock Exchange trading system, with a total transaction amount of 259,928,728.62 yuan (excluding transaction fees such as stamp duty and transaction commissions).
Profit forecasting and investment advice. Affected by the contradiction between supply and demand in the photovoltaic industry, prices in the overall industrial chain fell beyond expectations, putting pressure on the company's revenue and profit in 2024Q1, and forming a continuous bottoming trend in the future.
As a result, we have readjusted the company's revenue and net profit estimates to reduce the company's profit forecast for 2024-2025 from 111.39/13.106 billion yuan to 3.369/7.071 billion yuan. Furthermore, we expect the company's profit to reach 9.035 billion yuan in 2026. The three-year profit situation corresponds to PE of 14.0x/6.7x/5.2x, respectively, maintaining a “buy” rating.
Risk warning: New PV installations fall short of expectations, the competitive pattern of modules deteriorates, and the order growth rate declines.