Investment Rating - The report maintains a "Buy" rating for Tongling Co., Ltd. with a target price of 37.25 CNY per share, reflecting a potential upside of over 20% in the next six months [2][14]. Core Insights - Tongling Co., Ltd. reported a revenue of 1.54 billion CNY in 2023, a year-on-year increase of 23.4%, and a net profit of 165 million CNY, up 42.7% year-on-year. The gross margin was 22.9%, an increase of 7.18 percentage points [1][9]. - The company benefited from a significant increase in photovoltaic installations, with a reported 216.88 GW of new installations in China in 2023, a 148% year-on-year increase, leading to a 37% increase in the sales of junction boxes [1]. - The fourth quarter of 2023 saw a decline in net profit due to impairment provisions related to a customer facing financial difficulties, resulting in a total provision of 57.45 million CNY [1]. - The interconnect harness business is rapidly expanding, achieving a revenue of 209 million CNY in 2023 with a gross margin of 33.68%, and is expected to contribute significantly to future profits [1]. - The company is also entering the automotive parts sector, with a planned investment of 100 million CNY to produce components for electric vehicles, projected to generate 290 million CNY in sales once fully operational [1]. Financial Summary - Revenue and profit forecasts for 2024 to 2026 indicate a steady growth trajectory, with expected revenues of 2.17 billion CNY in 2024, 2.98 billion CNY in 2025, and 3.93 billion CNY in 2026. Net profits are projected to be 224 million CNY, 346 million CNY, and 492 million CNY respectively [9][17]. - The report anticipates a decline in gross margin in 2024 due to rising raw material costs, particularly copper, and increased expense ratios [1][9]. - The company's price-to-earnings (P/E) ratio is projected to decrease from 22.9 in 2023 to 7.7 by 2026, indicating an attractive valuation as earnings grow [17].
计提减值拖累利润，新业务业绩弹性可期