Event: The company released the first three quarters of 2023 performance announcement. The company realized revenue of 28.017 billion yuan from Q1 to Q3 in 23, with an increase of 33.27%, net profit attributable to parent of 1.279 billion yuan, with an increase of 71.18%; net profit deducted from non-parent of 1.571 billion yuan, with an increase of 104.10%. Corresponding to 23Q3 single quarter revenue of 10.41 billion yuan, the same increase of 233.84%, single quarter net profit of 418 million yuan, the same increase of 72.29%; single quarter deduction of non-parent net profit of 733 million yuan, the same increase of 149.09%. 23Q3 Non-recurring profit and loss of approximately-315 million yuan, which has a great impact on the net profit of a single quarter, mainly due to the award result received by the Company at the end of September for the contract dispute with FOCUS, and the award company compensated FOCUS for its direct losses, interest, the other party's attorney fees and arbitration expenses totaling USD 71.7175 million. The Company fully included the non-operating expenses of RMB 519 million yuan according to the award result.
Component shipments grew steadily, and silicon materials and energy storage profits were expected to narrow slightly month-on-month. 1) Module: Benefiting from the expansion of module production capacity of the Company, the improvement of self-supplied battery scale and the stabilization of PV upstream supply chain price, the sales volume and gross profit margin of 23Q3 modules of the Company increased year-on-year. It is estimated that the company's 23Q3 module shipments are about 6.5-7.0GW, the confirmed revenue scale is about 5.5GW (23H1 battery and module sales volume is about 8.37GW), and the profit per watt is 0.1 yuan, contributing to the main profit. 2) Polysilicon: In the first half of this year, the price of silicon material dropped a lot. According to InfoLink Consulting, the average price of dense block material on September 28 was about 87 yuan per kilogram. It is expected that the profit of silicon material of Q3 Company will narrow slightly compared with the previous month.
3) Energy storage system, lamps and auxiliary photovoltaic products: The price of lithium carbonate has dropped sharply since the beginning of the year, but the 23Q2 delivery order is a high-priced order locked in the early stage. The company benefits from the scissors difference between cost dividend and delivery price. The gross profit margin of Q2 single-season energy storage system has increased significantly, and the gross profit margin of 23H1 energy storage has increased from +7.17pct to 18.82% year-on-year.
It is expected that the company will gradually deliver the orders signed at the beginning of this year from Q3, and the order price will decrease year-on-year with the decrease of lithium carbonate price. It is expected that the profit scissors will narrow compared with Q2. We judge that the Q3 energy storage profit will narrow compared with Q2 or slightly.
Overseas component shipments drive profitability improvement. 1) Gross profit end: The gross profit margin of the company in Q3 23 is 17.43%, year-on-year +7.07pct/month-on-month +3.31pct, which is expected to be mainly due to the improvement of gross profit margin of component business. 2) Rate end: 23Q3 company period rate is 8.11%, year-on-year +1.62pct, mainly due to exchange effect caused by financial rate +2.11pct.
3) Net profit end: 23Q3 net interest rate 4.03%, year-on-year +1.11pct/month-on-month-1.14pct.
Looking ahead to 2023:1) Component: 23H1 Company has realized mass production of heterojunction G12 half-chip, 110μm heterojunction battery chip: Jintan Phase II heterojunction battery 4GW mass production line dielectric supply 12 days after the first line of the first batch of goods; two months after the first line to achieve full production, after the average efficiency of 25.5%, available yield 98.5%, single-line production of 340,000 pieces, fragmentation rate is lower than 0.9%, it is expected that the second half of the year and next year heterojunction shipments are expected to improve;2) Energy storage: The company's energy storage products include batteries, modules, industrial and commercial and large storage systems, and its liquid cooling energy storage battery system has passed UL certification in China and the United States. Lithium carbonate cost downward forecast catalytic large storage demand.
Earnings forecasts and investment advice. Considering that the result of this ruling has a great impact on the company's performance, we lower our performance forecast for this year. It is estimated that the net profit attributable to the parent company from 2023 to 2025 will be 17.22/26.27/31.71 billion yuan, with an increase of 82.3%/52.6%/20.7%, corresponding to 11.6/7.6/6.3 times of E PE valuation in 2023/2024/2025, maintaining the rating of "overweight".
Risk tips: rising raw material prices, lower-than-expected photovoltaic and energy storage demand, and the risk of policy change.