"Sell-off of Shovels" Suzhou Maxwell Technologies net profit growth rate dropped to single digits, core product gross profit margin fell to a record low, betting on HJT "falling behind" peers.

rgySuzhou Maxwell Technologies202232.62%202324.01%202232.3%202326.13% HJTSuzhou Maxwell Technologies202339.6796.31%202386.4151.26 Suzhou Maxwell TechnologiesHJTThe complete set of production equipment for RGY batteries contributed the majority of revenue, recording a revenue of 7.098 billion yuan in 2023, accounting for 87.76% of total revenue; followed by standalone products, achieving a revenue of 644 million yuan, accounting for 7.97% of total revenue; accessories and other products generated a revenue of 346 million yuan, accounting for 4.28% of total revenue.However, the performance on the profit side is slightly disappointing, with a decline in the gross profit margin of its product lines. CECEP Solar Energy's battery production equipment saw a decrease in gross margin of 5.71 percentage points to 30.31%. As the main source of income, the gross margin of CECEP Solar Energy's battery production equipment is not stable, achieving a historical high of 38.93% in the year of listing, followed by fluctuation in the following years, dropping to the lowest point since listing by 2023. Stand-alone, accessories, and other factors did not contribute to profit growth, with gross margins of 32.06%, 31.84%, and declines of 8.28 and 26.82 percentage points, respectively. Overall, Suzhou Maxwell Technologies achieved a gross profit margin of 30.51% in 2023, a year-on-year decrease of 7.8 percentage points. The main reasons are attributed to the continuous cost reduction demands from downstream customers, intensified competition in the photovoltaic market, temporary oversupply situations, and a significant decrease in the gross margin of the company's screen printing equipment. In addition, due to the previous production line transformations of the heterojunction full-line devices and the lack of economies of scale in manufacturing, the gross margin of the heterojunction full-line devices has not provided effective support for improving the company's overall gross margin. Since the beginning of this year, Suzhou Maxwell Technologies' gross margin has continued to decline, falling by 9.11% to 30.93% year-on-year. Securities Star noted that Suzhou Maxwell Technologies' inventory significantly increased to 10.781 billion yuan compared to 2022, a year-on-year growth of 102.26%. The number of product inventories increased from 737 units in 2022 to 2353 units in 2023, a growth rate of 219.27%, mainly due to some machines not being ready for delivery, leading to an increase in inventory. The increased inventory has tied up a large amount of working capital, resulting in a consecutive decrease in operating cash flow for Suzhou Maxwell Technologies in 2023 and the first quarter of 2024. In 2023, the operating cash flow decreased by 11.72% year-on-year to 755 million yuan, mainly due to a significant increase in orders, leading to an increase in inventory materials, especially customized materials, long lead-time materials, and imported materials. The operating cash flow for the first quarter of this year further declined by 97.64% year-on-year to 6.8596 million yuan. The capacity of HJT is yet to be fully utilized, and the semiconductor business is still in its early stages. The annual report shows that Suzhou Maxwell Technologies, as one of the few suppliers in the photovoltaic industry that can provide HJT CECEP Solar Energy's battery full-line production equipment, has won multiple projects. Projects such as Anhui Huasheng, Gansu Golden Solar, and India's Reliance Industries have all purchased the company's HJT CECEP Solar Energy battery full-line equipment. According to BOC International's research report, the company achieved bulk deliveries of 600MW of HJT production equipment in 2023 and larger capacity equipment shipments. In its annual report, Suzhou Maxwell Technologies mentioned that under the internal drive of photovoltaic enterprises to further reduce costs and increase efficiency, HJT is expected to become the mainstream route for the next generation of battery chips. However, in the current situation where HJT has not been able to achieve mass production, TOPCon has taken the lead and become the mainstream battery technology in the market. InfoLink Consulting's forecast data shows that by 2024, TOPCon battery technology will have a market share of 65%, while the combined market share of HJT and BC battery technologies will be 10%. Analysts point out that the main reason for the slower development of HJT technology compared to TOPCon is its high cost. Currently, the costs of HJT batteries and components are almost equal to TOPCon, but there is still a significant gap in equipment investment costs. The investment cost for just 1 GW of equipment for HJT is 350 million yuan, while for TOPCon, it is at most 120 million yuan. Chairman Zhou Jian of Suzhou Maxwell Technologies stated at the 2023 performance briefing that this year, the cost of HJT batteries is expected to be on par with TOPCon, as HJT battery scale is less than 10% of TOPCon, showing the huge potential of this technology. Despite being listed in the same year in 2018, Shenzhen S.C New Energy Technology Corporation's market value is lower than that of Suzhou Maxwell Technologies, but its performance is equally impressive. Shenzhen S.C New Energy Technology Corporation is a supplier of equipment with multiple technological solutions and is also a major equipment supplier for TOPCon technology. With TOPCon technology becoming the mainstream, the performance of Shenzhen S.C New Energy Technology Corporation has also been strong, achieving a revenue of 8.733 billion yuan in 2023, a year-on-year increase of 45.43%; with a corresponding net profit of 1.634 billion yuan, a year-on-year increase of 56.04%. Both revenue and net profit have surpassed those of Suzhou Maxwell Technologies. Compared to Shenzhen S.C New Energy Technology Corporation's layout with multiple technological routes, Suzhou Maxwell Technologies focuses on the research and development of HJT batteries and perovskite tandem-layer batteries, with the latter still in the research and development phase. In a previous institutional research, Suzhou Maxwell Technologies mentioned that the industrialization of heterojunction and perovskite tandem-layer batteries will pose challenges.The annual meeting of the Year of the Pig will be in 2027 or 2028. However, the market is concerned that HJT's production capacity is still unable to increase, and how will Suzhou Maxwell Technologies maintain its growth in the coming years?Securities Times noted that while maintaining the advantage of CECEP Solar Energy battery production equipment, Suzhou Maxwell Technologies is also seeking a second growth curve. The company has successively developed core equipment for display panels, semiconductor packaging, including OLED flexible screen laser cutting equipment, MLED full-line automation equipment solutions, semiconductor wafer packaging equipment, and more. Liu Qiong, the secretary of the board of directors of Suzhou Maxwell Technologies, stated that the company's semiconductor testing equipment and display-related equipment are one of the company's strategic directions and are currently in the early stages of development, with progress going smoothly. It is reported that in addition to the Zhuhai upgrade semiconductor equipment project, Suzhou Maxwell Technologies has also acquired 259 acres of land for a new project scheduled for 2023, planning to invest in the construction of a "pan-semiconductor equipment" project aimed at independently developing and manufacturing high-end equipment in the semiconductor industry. The total planned investment for the project is 3 billion yuan, with construction scheduled to start this year. With the support of the semiconductor business in the future, can Suzhou Maxwell Technologies reproduce high growth? Securities Times will continue to monitor the situation. (This article was first published in Securities Times, Author: L Wenyang) This article is reprinted from "Securities Times", written by L Wenyang.