Incident: The company released its 2023 annual report, achieving annual revenue of about 10.29 billion yuan, net profit of 442 million yuan, +13% year-on-year, net profit of 396 million yuan, +10.1% year-on-year; of these, the fourth quarter achieved revenue of 2.89 billion yuan, +78% year-on-month, -10% month-on-month, net profit to mother of 1.28 million yuan, year-on-year -98.56%, net profit of non-return mother -8.71 million yuan, -10% year-on-month, -104% month-on-month, including loss of goodwill assets Loss of value approximately 4770 10,000 yuan, loss of 12.7 million yuan due to changes in fair value.
Performance was under pressure due to the sharp discontinuation of PERC battery production in the fourth quarter. 24Q1 improved with the increase in LECO silver paste volume and share. The company shipped about 2002.96 tons of photovoltaic silver paste in '23, +46%, of which 23Q4 shipments were about 550 tons, -10% month-on-month. This was mainly due to the sharp reduction in PERC battery production due to losses, the company's high market share of PERC silver paste, which had a significant impact on shipments, and the scrap of superimposed products affected the increase in costs. With the increase in the share of type N and the increase in LECO paste processing costs, the company's LECO silver paste processing fee premium continues to rise, and the rapid increase in market share is expected to drive better performance. Silver paste shipments are expected to be around 3,000 tons in '24, and N-type is expected to account for more than 70%.
Self-supply of silver powder and expansion of overseas production strengthen the profitability of silver paste, and achieve platform-based expansion around 0BB glue and electronic paste. According to the company's announcement, the company's acquisition of Jiangsu Lianyin is committed to localizing photovoltaic silver powder. 23Q4 has achieved self-supply of monthly silver powder, which is expected to increase profits and guarantee quality in 24 years; the Thai subsidiary has completed the construction of a 600-ton silver paste project, and Japan Juhe Technology has completed registration; the company is actively incubating new SKUs and has developed novel 0BB adhesives to counteract the effects of silver reduction, as well as EC low temperature conductive paste and LTCC conductive paste.
Profit forecasting and investment advice. The estimated net profit for 24-26 years is 8.5/9.6/1.0 billion yuan. Referring to the 24-year average of 16 times PE, the company is given a 15 times PE valuation, corresponding to a reasonable value of 76.81 yuan/share, maintaining a “buy” rating.
Risk warning. Silver paste processing costs fluctuate greatly; the company's technological innovation speed falls short of expectations; industry competition intensifies; risk of macroeconomic fluctuations, etc.