The company disclosed its 2024 three-quarter report. The results for the first three quarters were -61% year-on-year, and profitability increased month-on-month in the third quarter; the company launched an equity incentive plan to highlight the company's confidence in development; and maintained an increase in holdings rating.

Key points to support ratings

2024Q3 performance increased 690.21% month-on-month: The company released its 2024 three-quarter report, and achieved revenue of 2.477 billion yuan in the first three quarters, up 21.04% year on year; achieved profit of 0.046 billion yuan; decreased by 60.54% year on year, after deducting 0.039 billion yuan of non-profit, decreased by 65.76% year on year. According to the performance calculation, in 2024Q3, the company achieved a profit of 0.01 billion yuan, a year-on-year decrease of 76.58%, and a month-on-month increase of 690.21%.

Profitability increased month-on-month: In the first three quarters of 2024, the company's comprehensive gross margin fell 6.54 percentage points year on year to 6.06%, and the comprehensive net margin fell 3.89 percentage points year on year to 1.86% year on year. Among them, 2024Q3 achieved a gross profit margin of 4.08%, a decrease of 2.32 percentage points over the previous month; a net profit margin of 1.28%, an increase of 1.15 percentage points over the previous month.

The equity incentive plan shows the company's confidence in development: in October 2024, the company disclosed the 2024 restricted stock incentive plan, and the number of restricted shares to be granted to incentive recipients is approximately 0.2578 million shares. The performance assessment goals are: 1) The first vesting period: based on the average welding belt product shipment volume from 2022 to 2023, the 2024 welding belt product shipment growth rate is not less than 37% (0.038 million tons); or based on the average operating income from 2022 to 2023, the revenue growth rate for 2024 is not less than 34% (3.198 billion yuan); 2) The second vesting period: based on the average welding belt product shipment volume from 2022 to 2023, 2024 and The cumulative growth rate of welding belt product shipments in 2025 was not less than 114% (0.0593 million tons); or the cumulative revenue growth rate in 2024 and 2025 was not less than 95% (4.654 billion yuan).

The company has a rich product line and can be combined with new photovoltaic technology for targeted shipments: with the rapid industrialization of N-type TopCon batteries, the proportion of the company's welding belts suitable for N-type TopCon battery modules is gradually increasing. At the same time, the company's welding belt product line covers technical routes such as HJT and XBC, and has developed welding belt products suitable for different components, which can be used in line with the penetration of downstream photovoltaic technology to achieve targeted delivery.

valuations

Combining the PV welding belt supply and demand pattern, module price trends, and the pace of introduction of new photovoltaic technology, we adjusted the company's 2024-2026 earnings forecast to 0.80/2.04/2.48 yuan (the original forecast earnings per share for 2024-2026 was 1.95/3.01/3.85 yuan), corresponding to a price-earnings ratio of 51.9/20.3/16.7 times; maintaining an increase in holdings rating.

The main risks faced by ratings

Price competition exceeded expectations; raw material prices fluctuated unfavourably; downstream demand fell short of expectations; PV policies fell short of expectations; new product certification progress fell short of expectations.