Report summary:
The global PV installation boom continues to be high. CPIA predicts 390 to 430 GW of global PV installations in 2024, and the number of global GW markets is expected to grow rapidly. According to Li Zhenguo, CEO of Longji Green Energy, the global PV installation scale will have to reach 1.5 to 2 TW and be maintained for a long time before it can truly provide effective support for the energy transition.
Emerging markets such as India and the Middle East have outstanding opportunities. According to EIA forecasts, India may surpass China and the US as the largest PV installed country in the future; demand for PV installations in the Middle East is growing steadily, and InfoLink predicts that it is expected to grow to 29-35 GW by 2027. The company's tracking bracket shipments rank first in the Asia-Pacific region and second in the Middle East, and are expected to fully benefit from the development of emerging markets.
There is considerable room for long-term improvement in the penetration rate of domestic tracking stents. China's photovoltaic stent market is dominated by fixed brackets, and the penetration rate of tracking stents in 2023 is only 5.3%. According to Wood Mackenzie's statistics, the global tracking stent penetration rate in markets other than China has reached 49%, and in some developed markets, such as the US, it is over 80%.
The main catalysts for future penetration rate increases include: (1) gradual resolution of consumption issues; (2) owners' ultimate pursuit of initial investment costs is gradually transformed into scientific full-life cycle benefit considerations; and (3) manufacturing quality and technology review mechanisms or gradual improvement.
The company's profit margins increased in 2023Q4 and 2024Q1. 2023Q4 gross profit margin 19.9% yoy +6.7pct, net profit margin 6.3% yoy +2.4pct; 2024Q1 gross profit margin 20.8% yoy +7.3pct, net profit margin 8.1% yoy +3.1 pct.
The company has sufficient orders in hand, and sales of tracking brackets are expected to remain high. As of 2024Q1, the company had orders of 6.8 billion yuan, of which 5.9 billion yuan/800 million yuan/100 million yuan for tracking brackets/fixed brackets/other businesses. It is estimated that the current order is 12.6 GW/3.6 GW for tracking brackets/fixed brackets. The company achieved 7.6GW of tracking bracket sales in 2023, +129% year-on-year, and is expected to maintain a relatively high increase in 2024. The tracking bracket business, in particular, has an excellent gross margin for the export portion. The gross profit per W is expected to be 0.1 yuan or higher, which is expected to effectively support profits.
Raise the rating to “Buy.” The company's various businesses are expected to maintain high growth in 2024, with tracking bracket sales expected to reach 12GW+, an increase of 50% + over the previous year. In view of the company's orders and profit margins exceeding expectations, the growth of the tracking support business accelerated markedly, and the profit forecast was raised. Net profit from 2024 to 2026 is expected to be 7.0/9.4/1.21 billion yuan, +103%/34%/29% year-on-year, and the corresponding PE is 20/15/12 times.
Risk warning: macro-environmental risk, exchange risk, raw material price fluctuation, performance falling short of expectations