Key points of investment
Incident: The company's revenue in 2023 was 59.146 billion yuan, down 11.74% year on year; net profit to mother was 3.416 billion yuan, down 49.9% year on year; of these, 2023Q4 net profit to mother was 2,772 billion yuan, down 252.48%, down 267.84%, net profit after deducting non-return to mother - 2,734 billion yuan, down 282.32% year on year.
Silicon wafers continue to grow at a high rate, and competition is putting pressure on profits. The company shipped 114 GW of silicon wafers in 2023, an increase of 68%; the market share of silicon wafers was about 23.4%, and the N-type market share was 36.4%, maintaining the first place in export sales. Shipments in 2023Q4 were about 29GW, up 65% /down 13%. Due to increased competition in Q4, Q4 basically had a break-even balance; components shipped 8.6GW for the whole year, an increase of 29.8%; 2023Q4/2024Q1 shipments continued to lose 3.4/1.6 GW as a whole. Shipments of 2024Q1 silicon wafers were about 35 GW, an increase of 21%. There was overcapacity in the industry, and there was a slight loss in profits; the operating rate of silicon wafers was divided and prices fell sharply, and profits have reached the bottom. It is expected that 2024H2 may show signs of clearing the second and third lines, which is expected to improve profits. The company is expected to ship 130GW+ in 2024, maintaining its leading position.
Carefully lay out production capacity and strengthen global development. At the end of 2023, the silicon wafer production capacity was 183 GW, maintaining the leading position; in terms of battery modules, Jiangsu had put into operation a differentiated TopCon production line to reduce silvering costs; at the end of 2023, the production capacity of stacked tile modules was 18 GW, and the 2023Q4 completed the development and mass production of tile 4.0 products. At the same time, it is planned to build crystal chip production capacity in Saudi Arabia, with 20 GW of design in the first phase; the participating company Maxeon has patents for IBC batteries and laminated modules, has production capacity in Southeast Asia and Mexico, and plans to build 3GW TopCon battery module production capacity in the US; the global layout is further deepened.
Inventories have declined, and industrial price cuts have affected operating cash. 2024Q1's inventory was about 7.48 billion yuan, down about 700 million yuan; net operating cash flow was about 300 million yuan, down 71% /81%; mainly due to declining industrial prices, revenue decreased by 81%; mainly due to declining industrial prices, which affected cash.
Profit forecast and investment rating: Considering the intensification of competition and the continued decline in silicon wafer profits, we lowered our 2024-2025 profit forecast and added a 2026 profit forecast. We expect the company's 2024-2026 net profit of 18/26/3.8 billion yuan (pre-2024-2025 value of 31/45 billion yuan), -46%/+42%/+45% year-on-year, corresponding to the current PE of 23/16/11 times, maintaining the “buy” rating.
Risk warning: increased competition, fluctuating raw material prices