The company announced the 2023 three-quarter report. In the first three quarters of 2023, the company achieved operating income of 18.788 billion yuan, an increase of 114.83% over the previous year, net profit of 1,403 billion yuan, an increase of 68.98%; in the third quarter alone, it achieved operating income of 6.659 billion yuan, an increase of 49.68% over the previous year, and realized net profit of 785 million yuan, an increase of 64.61% over the previous year. As a leading enterprise in energy-saving and water-saving equipment and reduction furnaces, the company has plenty of equipment business orders, the gradual release of silicon wafer production capacity, and is actively entering the field of hydrogen energy. In the future, the company's business is expected to blossom more and continue to grow, and continue to maintain an increase in holdings.

Key points to support ratings

The commencement of production of the silicon wafer business contributed to high performance, and Q3 profitability increased significantly. As the company's monocrystalline silicon project was put into operation, the company's performance ushered in rapid growth. In the first three quarters of 2023, the company achieved operating income of 18.788 billion yuan, an increase of 114.83% over the previous year, and realized net profit of 1,403 billion yuan, an increase of 68.98% over the previous year. In terms of profit, as silicon prices bottomed out in June and the company's size advantage gradually became apparent, the company's profit recovery was obvious. The company's overall gross margin for the third quarter alone was 20.44%, down 0.04pct year on year, up 7.43 pct month on month, net profit margin was 12.31 pct, up 0.92 pct year on year, and 10.06 pct month on month.

Further expand silicon wafer production capacity and abundant production capacity reserves to support future performance development. At present, the company's 40GW monocrystalline silicon project in Baotou has achieved full production. In November 2022, the company announced a three-phase monocrystalline silicon pultrusion project with an annual output of 50 GW. The construction period is two years, further consolidating and strengthening the company's position in the monocrystalline silicon pultrusion market. It is expected that by the end of 2025, the company will have 90GW of crystal production capacity, providing strong support for the company's performance with the release of PV installation demand.

Equipment orders are stable, and entering the hydrogen energy sector has added new growth impetus. The company's traditional main business is energy-saving and water-saving equipment. Order announcements have been frequent since 23 years, supporting the steady development of this business. In addition, the company is actively entering the field of green power hydrogen production. In September, the company's 2000Nm3/h alkaline electrolyzer with independent intellectual property rights was successfully rolled off the line, which is expected to become a new driving force for the company's performance growth in the future.

valuations

Based on the company's performance in the first three quarters, we fine-tuned the company's profit forecast. We expect to achieve operating income of 232.41/305.03/38.452 billion yuan in 2023-2025, and net profit of 18.76/26.81/3.398 billion yuan, corresponding to PE 9.7/6.8/5.3 times, maintaining an increase in holdings rating.

The main risks faced by ratings

Risk of downstream PV installations falling short of expectations; risk of increased competition in silicon wafers; risk of rising raw material prices.