Core views
The company released its 2023 annual report. During the reporting period, it achieved net profit of 5.763 billion yuan, a year-on-year decrease of 69.86%. Among them, the company's net profit for the Q4 quarter was 648 million yuan, a year-on-year decrease of 83.95%, and a year-on-month decrease of 6.0%. Since Q4, there has been a significant premium for N-type silicon. The company's Q4 silicon contract price bucked the trend and increased month-on-month, and net profit per ton improved. During the reporting period, the company fully produced and sold silicon, with production and sales volumes of 198,000 tons and 200,000 tons respectively. At the end of the year, the company's silicon inventory was 0.38,000 tons, down 67.76% year on year, returning to normal levels. Currently, the company's silicon production capacity is 205,000 tons/year. It is expected to reach 305,000 tons/year by the end of the year. The annual silicon production is expected to be between 28 and 300,000 tons, and the industry position is stable.
occurrences
The company released its 2023 annual report. During the reporting period, the company's revenue was 16.329 billion yuan, down 47.22% year on year, and net profit to mother was 5.763 billion yuan, down 69.86% year on year; of these, the company's revenue for the Q4 single quarter was 3.451 billion yuan, down 44.90% year on year, down 2.88% month on month, and net profit to mother was 648 million yuan, down 83.95% year on year and 6.00% month on month.
Brief review
N-type silicon premium was significant. Q4's silicon contract price bucked the trend and increased month-on-month, and net profit per ton improved. Referring to the Silicon Industry Branch data, the average quarterly prices of Q4N silicon and composite materials were 7.41 and 67,600 yuan/ton (tax included), down 12.7% and 10.4% from month to month, but the average price of the company's Q4 was 57,000 yuan/ton, up 3.2% from month to month. The average net profit per ton (net profit caliber to mother) was 10,600 yuan/ton, a slight increase from month to month.
The company had full production and sales during the reporting period, and inventory remained low at the end of the year. The company's silicon production and sales volume for the full year of 2023 were 198,000 tons and 200,000 tons, respectively, of which 61,000 tons were produced and sold in a single quarter in Q4. At the end of the year, the company's silicon inventory was 0.38 thousand tons, a year-on-year decrease of 67.76%, returning to normal levels.
Production capacity has been released steadily, and the position of the industry is stable. Currently, the company's silicon production capacity is 205,000 tons/year, and Inner Mongolia Phase 2 is expected to be completed and put into operation in 2024Q2. The company's production capacity is expected to reach 305,000 tons/year in the second half of the year. Considering maintenance factors, the company expects silicon production to be between 28 and 300,000 tons in 2024.
Self-built industrial silicon production capacity and supply chain security have improved. The company has completed the preliminary procedures for the 150,000 tons/year industrial silicon project. Construction is expected to begin after the Spring Festival. Industrial silicon integration will help guarantee the supply and traceability of silicon raw materials.
Investment advice: The company is a first-tier silicon leader, with excellent silicon quality, leading cost advantages, and sufficient on-hand orders. We expect the company's net profit to be 29.25, 35.24, and 4.104 billion yuan respectively in 2024-2026, with year-on-year growth rates of -49.25%, 20.48%, and 16.47%, respectively. Earnings per share are 1.36, 1.64, and 1.91 yuan, respectively. PE corresponding to the closing market value on March 30 is 19.8, 16.4, and 14.1 times, respectively.
Risk warning: 1. Rapid release of silicon production capacity. There was a lot of silicon production and new production capacity in 2024. If silicon production capacity is released quickly in a short period of time and is faster than demand growth, it may cause silicon prices to drop drastically, affecting the company's performance; 2. Demand for photovoltaic terminals falls short of expectations. Demand for components may fall short of expectations due to industrial chain prices, consumption situations, and weak demand; the production side may fall short of expectations due to large fluctuations in upstream raw material prices, electricity restrictions, etc., which in turn affects the company's related business shipments and profitability; 3. Raw material prices have risen sharply. The main raw material of silicon is industrial silicon. If the supply of industrial silicon is insufficient and the price rises due to factors such as electricity restrictions, the company's silicon costs may rise, affecting profitability; 4. Risk of litigation. The company received a court summons and related litigation materials on January 23. The lawsuit was a litigation dispute between the company and the supplier relating to the performance of the contract and the quality of the target product. The company was the defendant. The amount involved was RMB 1,959 million, of which the unpaid purchase price was RMB 29.0865 million, and anticipated or potential economic losses of RMB 1,929 million, accounting for 10.24% of the company's most recent audited net profit attributable to shareholders of the listed company.