Core views
The company released the 2023 annual report and the 2024 quarterly report. Net profit for the full year of 2023 was 151 million yuan, up 50.69% year on year, of which Q4 single quarter was 34 million yuan, up 35.45% year on year, down 24.75% month on month; 2024Q1 achieved net profit of 35 million yuan in single quarter, down 4.18% year on year and 2.80% month on month. Since Q4 2023, MBB welding belt profit processing costs and profits have been under pressure due to the adjustment of component production schedules and the accelerated withdrawal of P-type products. Demand for photovoltaic modules grew rapidly in 2023, and the company sold about 33,000 tons of welding belts, an increase of 48% over the previous year. The company's production capacity has been steadily expanding. Currently, the production capacity is about 3,500 tons/month. As the new production capacity of 20,000 tons/year in Anhui continues to be implemented, production capacity will continue to increase. The company has sufficient technical reserves for N-type welding belts. It is expected that during the transformation of photovoltaic modules and batteries from P-type to N-type, the company's welding belt market share and unit profit will continue to increase.
occurrences
The company released the 2023 annual report and the 2024 quarterly report. The company's revenue for the full year of 2023 was 2,762 billion yuan, up 37.36% year on year, and the company's net profit for the full year of 2023 was 151 million yuan, up 50.69% year on year; of these, the company's revenue for the Q4 single quarter was 716 million yuan, up 25.82% year on year, down 5.11% month on month, and net profit from mother was 34 million yuan, up 35.45% year on year, down 24.75% month on month; 2024Q1 The company's revenue for the single quarter was 7.0 million yuan 100 million yuan, up 26.19% year on year, down 2.28% month on month. Net profit to mother was 35 million yuan, down 4.18% year on year and 2.80% month on month.
Brief review
Since Q4 2023, the module production schedule has been adjusted and P-type products have been withdrawn at an accelerated pace, and MBB welding belt profit processing costs and profits are under pressure. Since 2023Q4, the share of TopCon batteries has increased rapidly, leading to a sharp reduction in MBB welding belt market space and a rapid drop in processing costs. As a result, 2023Q4-2024Q1 company's gross margin fell rapidly, from 13.16% in 2023Q3 to 7.25% and 7.85% respectively. The gross margin per ton of welding tape dropped sharply during this period, dragging down 2023Q4-2024Q1's performance.
Demand in the photovoltaic industry is growing rapidly, which has led to a significant increase in the company's shipments. In 2023, the company's welding belt sales volume was around 33,000 tons, up 48% year on year. Mainly due to the rapid increase in module production in 2023. Referring to PVInfoLink data, global component production in 2023 was about 540 GW, a year-on-year growth rate of about 68%.
Production capacity continues to expand, and production technology is leading. By the end of 2024Q1, the company's welding belt production capacity was about 3,500 tons/month (including some 20,000 tons/year projects in Anhui). As the 20,000 tons/year project in Anhui continued to be implemented, the company's production capacity was steadily expanding.
The company has sufficient technical reserves for N-type welding belts. It is expected that during the transformation of photovoltaic modules and batteries from P-type to N-type, the company's welding belt market share and unit profit will continue to increase. Photovoltaic welding belts are a part of the photovoltaic industry with a scattered pattern. It is mainly due to lower barriers and more entrants in the early years, but with the determination of the technology trend of multiple main gates for modules, the trend of refining welding belts is obvious. Currently, SMBB welding belts have reached 0.0.24-0.25mm, and the 0BB welding belt wire diameter will drop further to 0.2-0.22mm in the future. It is expected that in the process of future technology iterations, the company will continue to occupy a market share as an industry leader with sufficient technical reserves upgrade. At the same time, due to the increasing difficulty of processing SMBB and 0BB welding belts, there is also a certain premium on processing costs, so it is expected that the company's profit per unit of welding belt products will continue to increase as the proportion of new products increases.
Investment advice: The company is a leader in photovoltaic welding belts, with a complete range of products, high cost performance and strong competitiveness. It is expected that in the process of technological iteration of N-type products, its market share will continue to increase, achieving a higher growth rate than the industry. The company's net profit for 2024-2026 is estimated to be 1.93, 2.8 billion yuan, and 320 million yuan, respectively, with year-on-year growth rates of 27.56%, 45.03%, and 14.27%, respectively. Earnings per share are 1.86, 2.69, and 3.08 yuan, respectively. PE corresponding to the closing market value on April 19 is 20.7, 14.2, and 12.5 times, respectively.
Risk warning: 1. The risk of increased competition in the industry. The welding belt process is a relatively scattered link in the photovoltaic industry chain, and capital expenditure is low and production expansion is rapid. If the company cannot improve competitiveness through continuous development of new products, the company may face the risk of declining market share and declining gross margin; 2. There is a risk of fluctuating raw material prices. The main raw materials of photovoltaic welding belt products are copper and tin, and the direct material station cost of the product is about 90%. Although the company continues to track market price information and cope with price changes through tools such as hedging, if there is a large divergence between short-term product prices and raw material prices, the company's gross margin may be affected; 3. Risk of bad debts on accounts receivable and bills. Since the company's raw materials copper and tin are all commodities, they require cash purchases, and downstream component customers usually pay bills after a certain accounting period, so the company's accounts receivable and notes are large. If the company's customer's future financial situation or credit situation deteriorates and payments are not in place, the normal operation of the company may be affected; 4. There is a risk that the share of SMBB and 0BB welding belt shipments will not increase as much as expected, and processing costs will fall too fast. Since SMBB and 0BB welding belt wool interest rates are higher than traditional MBB welding belts, With SMBB, 0BB welding tape The share is increasing. The gross margin of the company's welding belt products is expected to increase year by year, but if SMBB and 0BB welding belt shipments fall short of expectations or processing costs fall too fast, the increase in the company's overall gross margin may be affected.