Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 2,762 billion yuan, and realized net profit of 151 million yuan, or 50.69% year over year. Among them, 24Q1 achieved revenue of 700 million yuan, +26.19% year over year, and -2.28% month on month, achieving net profit of 35 million yuan, -4.18% year on month, and +2.80% month on month. At the same time, the company announced a profit distribution plan for 2023, which plans to distribute 2.7 yuan for every 10 shares, for a total cash dividend of about RMB 28.08 million. The performance was in line with expectations.
Shipments increased steadily throughout '23, and profitability declined year-on-year in 24Q1. As of 2023, the company's shipments of photovoltaic welding belt products continued to increase, with sales reaching 33,300 tons, or +47.83% over the same period last year. Among them, we estimate that SMBB accounts for about 50%. As of 24Q1, the company's core SMBB products have a wire diameter of less than 0.26mm, and 0.18-0.20mm wire diameter SMBB welding belt companies currently have supplies. From a profitability perspective, the gross margin of the company's interconnected welding belt in 2023 was 10.07%, +0.31pct year on year, and 11.20% year-on-year, -1.40pct year on year. At the same time, due to continued growth in commodity prices on the raw material side, the company's profitability fluctuated. 24Q1 gross margin was 7.85%, -5.31 pct year on year, and +0.60 pct month-on-month. Meanwhile, in 2023, the company accrued a total of about $16.94 million in credit and asset impairment losses.
The leading position is stable, and the penetration rate of new products is expected to increase further. The company has successfully issued convertible bonds and raised 585 million yuan to expand new production capacity by 20,000 tons. As the company's production capacity and shipments continue to grow, the company's market share of welding belt products was about 20% as of 24Q1, and is expected to reach more than 25% in the future. We expect the company's welding belt product shipments to increase by about 10,000 tons year-on-year in 2024, and the overall shipment volume is expected to reach about 40,000 tons. As of 2024, Q1 has successfully mass-produced 0BB welding belts for TopCon and HJT cells in terms of interconnected welding belts, and has quickly entered the promotion of leading component suppliers. The wire diameter of the new 0BB product is expected to be gradually reduced to less than 0.24mm, further helping TopCon and HJT cells reduce costs and increase efficiency.
Investment advice: The company expands production smoothly and the market share may increase. 0BB's first-mover advantage for new products is obvious. We expect the company's net profit to mother in 2024E-2026E to be 233/308/508 million yuan, respectively, +54.1%/+53.4%/+42.1% year-on-year, respectively. The corresponding EPS was 2.24/3.44/4.89 yuan, respectively. Give it a “buy” rating.