Description of the event
Linyang Energy released its 2023 three-quarter report. The first three quarters of 2023 achieved revenue of 4.75 billion yuan, an increase of 31.85%; net profit of 851 million yuan, an increase of 15.96%; of these, 2023Q3 achieved revenue of 1,539 billion yuan, a year-on-year increase of 20.08%, a year-on-year decrease of 28.29%; net profit of 270 million yuan, a year-on-year decrease of 16.75%, a year-on-year decrease of 29.78%.
Incident comments
Lin Yang Energy previously released a voluntary disclosure announcement on the results forecast for the first three quarters of 2023. It is expected that the first three quarters of 2023 will achieve imputed net profit of 805-885 million yuan. Judging from the company's actual announcement, 2023Q3 performance is within the previous forecast range.
Looking at the specific breakdown, 1) Energy storage Q3 may have declined month-on-month, mainly because Q2 had 630 connected to the grid, Q2 delivered nearly half of the total volume for the whole year, and Q3 companies' gross margin of energy storage business is expected to be relatively stable. 2) In EPC business, delivery confirmation requires equity settlement rather than confirmation based on construction progress. Among them, the Xiantao 200MW photovoltaic+120MWh energy storage power plant has been completed, and the delivery time is in Q4, which affects the pace of the company's revenue recognition. However, judging from the industry situation this year, profitability has improved significantly compared to last year. 3) Electricity bill revenue is stable. 4) The electricity meter business is growing steadily.
In terms of financial data, the company's fee rate for the 2023Q3 period was 11.97%, an increase over the previous month. Mainly affected by exchange gains and losses, the financial expense ratio increased from -2.55% in 2023Q2 to 0.66%. Furthermore, the company increased investment in R&D, and the R&D cost rate increased from 2.03% to 4.21%.
Looking ahead to the follow-up, 1) The company's energy storage business has gradually entered the implementation period. 2023H1 is affected by the combination of raw materials, and profit has increased significantly. Looking ahead, the company's industrial and commercial energy storage product line has been officially released and has achieved batch supply. As the share of industrial and commercial energy storage gradually increases, the gross margin is expected to remain stable in the future. 2) In terms of EPC business, 2022 was affected by high component prices, and both volume and profit of the EPC business were greatly affected. However, this year, with component prices being reduced, there were obvious signs of project recovery, and profits gradually recovered, but due to the impact of project delivery, it is expected to be mainly reflected in Q4. 3) In terms of TopCon batteries, since announcing the construction plan last year, the company has actively promoted the progress of the project, and the 2023Q4 is expected to contribute to part of the shipment. 4) The overall smart meter sector is growing steadily.
We expect the company to achieve imputed net profit of 11.15 billion yuan and 1.56 billion yuan in 2023 and 2024, corresponding to PE 12 and 9 times, respectively.
Risk warning
1. The competitive pattern deteriorated;
2. PV installation falls short of expectations.