The company released its report for the third quarter of 2024. In the first three quarters of 2024, the company achieved operating income of 6.921 billion yuan, up 63.27% year on year; net profit to mother was 1.166 billion yuan, up 36.91% year on year; net profit after deducting non-return to mother was 1.152 billion yuan, up 39.36% year on year. Among them, the company achieved operating income of 2.504 billion yuan in 2024 Q3, an increase of 45.42% year on year; net profit to mother was 0.397 billion yuan, up 20.58% year on year; net profit after deducting non-return to mother was 0.38 billion yuan, up 17.11% year on year. In terms of net interest rate, the company's net interest rate for Q3 this year was 17.54%, down 2.29pct year on year.

The photovoltaic industry faces phased overcapacity in the short term. The company has excellent risk management capabilities, and the year-on-year growth rate of net operating cash flow is higher than the revenue growth rate. The company is a market segment leader in the photovoltaic equipment industry. The company's main products are photovoltaic equipment such as string welding machines, silicon wafer sorters, screen printing lines, laser-assisted sintering equipment, BC printing equipment, BC printing lines, light injection annealing furnaces, and low oxygen monocrystalline furnaces.

In terms of orders: As of September 30, 2024, the company signed new orders of 8.707 billion yuan (tax included), of which 2.422 billion yuan was placed in July-September, a year-on-year decrease of 25%. As of September 30, 2024, the company had orders of 13.434 billion yuan (tax included). Compared with January-September 2023, new orders decreased by 3.17% year over year, and active orders increased 16.99% year over year.

In terms of cash flow: In the third quarter of this year, net cash flow from operating activities was 0.421 billion yuan, +85% year over year and +117% month over month. The performance was better than the revenue growth rate.

1) String welding machine: The company began pre-developing 0BB welding technology in 2020, and successfully developed 0BB string welding machines and XBC string welding machines in 2023, with a market share of over 60%.

2) Single crystal furnace: In 2023, in order to solve the concentric circles caused by Topcon's silicon wafers due to high oxygen content, the company launched a cost-effective low oxygen monocrystalline furnace, and obtained batch orders from leading customers after launch.

3) Screen printing: The company led the industry to break through the ultra-fast cycle of 0.8 s for the first time (production capacity of 9,000+ pieces/hour), and achieved ultra-high precision printing of 6 microns, compatible with 182-230 sizes.

4) Laser enhanced metallization equipment LEM: At present, this equipment has been verified by several leading customers on the battery side of the TopCon process, and has received batch orders for mass production from TopCon's leading companies. The equipment has an obvious effect on improving battery conversion efficiency, and has become a new standard product for TopCon battery production lines.

5) Silicon wafer sorter: The company promotes product upgrades, from 13,500 tablets/hour upgrade iterations to 18,000 wafers per hour, while also meeting full half-chip compatibility, as well as dual-plug and half-chip compatibility. Currently, the world's major silicon wafer manufacturers such as Longji Green Energy, Gaojing Solar Energy, and Hongyuan Green Energy are all customers of the company's silicon sorters.

Investment advice: Because the photovoltaic industry is currently in a phase of overcapacity, we expect the company's net profit to be 1.654, 1.705, and 1.816 billion yuan in 2024-2026, up 31.7%, 3.1%, and 6.5% year-on-year.

The current stock price of the corresponding company PE is 10/10/9X. The company is a leader in photovoltaic string welding machines. It will take the lead and benefit deeply from the iteration of 0BB technology. At the same time, silicon wafer & cell products will continue to be enriched, and overseas markets are also expected to continue to grow, maintaining a “buy” rating.

Risk warning: 0BB technology expansion falls short of expectations, photovoltaic industry production expansion falls short of expectations, and market competition intensifies.