Key points of investment
The company's performance grew rapidly, and profitability bottomed out and rebounded
In 2023, the company achieved operating income of 2,762 billion yuan, a year-on-year increase of 37.36%, achieved net profit of 151 million yuan, a year-on-year increase of 50.69%, achieved a gross profit margin of 11.22%, a year-on-year increase of 0.01 pct, achieved a net profit margin of 5.48%, and a year-on-year increase of 0.49 pct. In 2023, the company achieved both improvement in development efficiency and quality around the product strategy of “restructuring, improving performance, strengthening the brand, and expanding the market”. In the fourth quarter of 2023, the company achieved operating income of 716 million yuan, an increase of 25.82% over the previous year, and achieved net profit of 34 million yuan to mother, an increase of 35.45% over the previous year. In the first quarter of 2024, the company achieved operating income of 700 million yuan, a year-on-year increase of 26.19%, a year-on-month decrease of 2.28 pct, achieved net profit of 0.35 million yuan, a year-on-year decrease of 4.18%, a year-on-month increase of 2.79%, a gross profit margin of 7.85%, a month-on-month increase of 0.60 pct, a net profit margin of 4.95%, an increase of 0.25 pct month-on-month, steady expansion of sales scale, and improvement in profitability month-on-month.
Adhering to basic innovation to accelerate product iteration and rapidly expand the sales scale in 2023, the company focused on core resources, deepened the main business, achieved both improvement in development efficiency and quality, achieved sales volume of 33,300 tons of welding tape, an increase of 47.83% over the previous year, and achieved 32,600 tons of welding belt production, an increase of 45.49% over the previous year, and the scale of production and sales grew rapidly. Driven by technological innovation, the company will continue to promote product R&D iterations in 2023, and continuously improve market share and profitability.
Continue to increase technological innovation and product layout, and promote product iteration to deepen core competitiveness. In 2024, the company will work around the business policy of “strong innovation, focus on talent, cost reduction, and excellent service”: 1) technological innovation: continue to strengthen research and development, based on the cutting edge of industry technology; 2) Product layout: around the strategy of “photovoltaic tinned welding belt products as the core+supported by non-welding belt products”, accelerate the launch of new products and iterative upgrading of leading products to continuously increase market share and profitability.
Profit forecasting
The profit forecast was lowered and the “gain” rating was maintained. The company is a leading photovoltaic welding belt company. It continues to increase R&D to ensure product competitiveness, and continues to strengthen cost control and stabilize raw material costs. Considering the continued decline in the price of downstream module products, as the core material of the module, the profitability and account recovery or short-term pressure, we lowered the company's profit forecast for 2024-2025 and added a profit forecast for 2026. The net profit for 2024-2026 is 2.30, 3.13, and 402 million yuan respectively (248 million yuan and 349 million yuan before the 2024-2025 reduction, respectively), and the corresponding EPS is 2.21, 3.86 yuan, and the corresponding PE is 16, 12, respectively. 9x, maintaining the “Overweight” rating.
Risk warning: Demand for components falls short of expectations; worsening competitive landscape; fluctuating raw material prices; risk of recovery of accounts receivable.