Event: The company released its 2023 annual report and 2024 quarterly report. On April 29, the company released its 2023 annual report, achieving operating income of 139.104 billion yuan, a year-on-year decrease of 2.33%; net profit attributable to shareholders of listed companies of 13.574 billion yuan, a year-on-year decrease of 47.25%; and net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss of 13.613 billion yuan, a year-on-year decrease of 48.73%. At the same time, the company released its 2024 quarterly report. In the first quarter, it achieved operating income of 19.570 billion yuan, a year-on-year decrease of 41.13%; realized net profit attributable to shareholders of listed companies - 787 million yuan, a year-on-year decrease of 109.15%; and net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss - 790 million yuan, a year-on-year decrease of 109.29%.
Shipments of silicon materials are growing rapidly, and falling silicon prices have put pressure on the profits of the silicon business. In 2023, the company's high-purity crystalline silicon production capacity was at full capacity, achieving sales volume of 387,200 tons, a year-on-year increase of 50.79%, and a global market share of more than 25%. In 2023, the high-purity silicon process ushered in the peak of the release of new production capacity. The relationship between supply and demand changed rapidly to relaxed, and product prices declined sharply. According to Antec statistics, the average price of monocrystalline dense materials dropped from 176,200 yuan/ton at the beginning of the year to 583,000 yuan/ton at the end of the year, a decrease of 66.91%. Affected by product price reductions, the company's silicon business revenue and gross margin were under phased pressure. The high-purity silicon business achieved revenue of 44.799 billion yuan for the whole year, a decrease of 27.57% over the previous year. The gross margin of the silicon business decreased by 21.87 percentage points year over year to 53.26%.
The quality and cost of silicon materials are continuously optimized: At present, the company's N-type products account for more than 90% of the monthly output. The 1000 tons/year electronic-grade polysilicon products that can be used in the semiconductor industry have successfully passed verification by domestic and foreign customers and achieved overseas supply. The average production cost of high-purity silicon products has been reduced to less than 42,000 yuan/ton in 2023, and the company's high-purity silicon business still achieved a net profit of more than 45,000 yuan per ton despite a sharp price reduction in 2023.
Battery module sales are growing rapidly, and the technical strength and production capacity structure remain industry-leading. In 2023, the company achieved battery sales of 80.66 GW (including personal use), an increase of 68.11% year on year; achieved module sales of 31.11 GW, an increase of 292.08% year on year, and the shipment volume entered the top five in the world (InfoLink Consulting data), with distributed market sales volume of 9.3 GW. The battery module business achieved annual revenue of 69.372 billion yuan, a year-on-year increase of 29.60%, and a gross profit margin of 12.77%, an increase of 2.58 percentage points over the previous year. In 2023, the company's TNC battery was introduced using new technologies such as high square resistance barriers and advanced metallization, and the latest mass production average conversion efficiency reached 26.26%. Compared with traditional PERC double-sided modules, its component products increased power generation by more than 30W, and the single-watt power generation gain increased by 3-5%; combined with fine management experience, the production process was continuously optimized to reduce single consumption. The non-silicon cost has now been reduced to around 0.16 yuan/W. The company's TNC battery production capacity is expected to exceed 100GW by the end of 2024, and the production capacity structure remains leading.
New battery technology continues to break through. In 2023, the company's THC pilot line successfully introduced cost reduction solutions such as 110 micron thin silicon wafers, low moisture heavy silver coated paste, and 0BB technology, and simultaneously sought differentiated breakthroughs in copper interconnection technology, making positive progress in graphics, metallization, and product reliability. Combined with the company's advanced component technology, it broke the HJT component power record six times, and the highest power exceeded 755W (210-66 version).
At the same time, the company continued to increase R&D investment in cutting-edge technologies such as back contact batteries and perovskite/silicon laminated batteries, and achieved phased R&D results. Among them, the highest batch efficiency of the P-type TBC pilot line reached 25.51%, the highest batch efficiency of the N-type TBC pilot line reached 26.66%, and the efficiency of small-sized perovskite/HJT laminated batteries reached 33.08%.
PERC fixed asset impairment affects performance. Since 2023, the profitability of PERC cells has continued to decline, TopCon solar cells have become the mainstream demand in the market, and there is great uncertainty about the expected future profitability and living space of PERC cells. Based on the principle of prudence, the company assessed the assets of the PERC solar cell production line in the middle and end of the year, and calculated fixed asset impairment reserves of 4.730 billion yuan for the difference that is expected to be recovered in the future less than the book value.
Investment advice. Under current share capital, based on the company's profitability and industry supply and demand, we expect the company's net profit to be 26.82/64.48/9.06 billion yuan in 2024-2026, corresponding PE of 37.92X/15.77X/11.29X, maintaining the company's “buy” rating.
Risk warning: risk of technological change, risk of fluctuating raw material prices, risk of overseas operations, increased risk of industry competition, risk of demand falling short of expectations.