We've seen Trina Solar's earnings reports before, and now they've released their 2023 earnings report, so let's take a look.
Trina Solar's revenue in 2023 increased by 33% year-on-year5%, although it has slowed down from the previous two years, but now Trina Solar is already 100 billion yuan, and it is still quite powerful to have such a high growth rate. Net profit is about the same as revenue, and the growth rate is higher, but it is also lower than last year. In the past three years, Trina Solar's revenue has increased nearly threefold, and its net profit has increased by more than three times.
"Photovoltaic modules" are Trina Solar's largest business, accounting for more than two-thirds, and about a quarter of "system products", while other businesses account for a relatively small proportion. The scale of revenue in China and abroad is about the same, and the revenue scale in China is slightly higher.
From a quarterly perspective, the revenue of each quarter has been increasing year-on-year, and since 2023, the growth rate of each quarter has been lower than that of the same period in 2022, and the growth deceleration is a common phenomenon in all quarters. The net profit in 2022 fluctuated up and down, and in 2023, after reaching the peak of the amount and growth rate in the first quarter, the growth began to decelerate, and the fourth quarter saw a significant year-on-year increase. Does this indicate that the three-year growth is coming to an end? Although this is not certain, with the rapid growth of production capacity, the decline of photovoltaic modules is inevitable, which will inevitably affect the profitability of such enterprises.
From the perspective of gross profit margin, there is no big problem with the profitability of the whole year, because Trina Solar's gross profit margin in the first three quarters of 2023 has rebounded sharply, which is already higher than the level of the previous three years and only slightly lower than that of 2019. However, the recovery of its sales net profit margin is not obvious, at least not as big as the recovery of gross profit margin, and the reason is that we will look at it later when we do the analysis of cost and expense composition.
After surpassing the gross margin in 2022, the return on equity continued to grow in 2023, reaching 191%, which is also more than the gross profit margin after growth. Increasing leverage on scale, in the industry growth period, can still significantly enhance the value of the company, this aspect of the content, we will look at the asset-liability structure later.
In previous years, the profitability of the main business was about 5 percentage points, and in the first three quarters of 2023, it reached 9 percentage points, and the profitability of the main business has been significantly enhanced. However, the decline in the ratio of expenses to revenue during the period has stopped, and it seems that the scale effect is close to the limit, and the growth of profit margin is mainly brought about by the recovery of gross profit margin.
In terms of other income, Trina Solar only had a net income in 2021, and the other years were net losses, although the "investment income" is getting higher and higher, but the "asset impairment loss" is also getting higher and higher, and after offsetting, it is still a net loss in the first three quarters of 2023. Judging from its semi-annual report, in addition to inventory, there is also a large impairment loss on fixed assets.
Trina Solar is quite strong in terms of cash flow performance, although the scale of revenue has expanded, and the occupation of inventory and receivables has increased, it still has a large amount of net cash inflow from operating activities every year, which has been around 10 billion yuan in the last year. However, Trina Solar has a large investment in fixed assets, and in the past two years, it has raised large amounts of net financing to meet this capital demand.
Its operating long-term assets have grown significantly, especially the large scale of fixed assets to be completed in 2023, which is the capacity basis for its revenue growth. The scale of its construction has declined, but it is still as high as 38900 million yuan, and there is still a lot of production capacity to be released in the future.
Trina Solar's assets and liabilities are expanding rapidly, with an asset-liability ratio of about 70%, and the leverage cannot be regarded as low, and high leverage is the main reason why its return on equity is higher than its gross profit margin in the past two years. In terms of short-term solvency, it is a passable level, with a slight increase at the end of the third quarter of 2023.
The size of its inventory is growing, accounting for more than 30% of current assets in the past two years, considering Trina Solar's rapid revenue growth in recent years, the growth of inventory should be mainly due to the natural growth of production capacity and sales volume. The increase at the end of the third quarter of 2023 is larger than that at the beginning of the year, and it seems that there are also market reasons.
Various financing instruments have been used, and at the end of the third quarter of 2023, the scale of its interest-bearing liabilities reached 34.5 billion yuan. Isn't that high? If the future performance is still relatively stable, this is not too much of a problem, but if the industry has serious overcapacity, it is difficult to say.
The amount of mutual arrears in some business chains is quite terrifying, and new records are constantly being set, although this is basically in line with Trina Solar's revenue growth level. However, too many receivables will bury hidden dangers for future bad debt losses, especially when the industry begins to reverse adjustment.
Its contract liabilities and advance receipts are also gradually increasing, especially at the end of the third quarter of 2023, and it seems that the number of orders in its hands has increased more, which is not consistent with the performance of inventory, because the composition of inventory may be more complex and inconsistent with the products required to be delivered under the contract.
Trina Solar's rapid growth in recent years has exceeded 100 billion yuan in a few years, and the subsequent development speed will inevitably slow down. If you can digest the problems brought about by the development of these years in a slow time, you will be much more relaxed when the industry adjusts.
Disclaimer: The above is a personal analysis and does not constitute investment advice to anyone!
Photovoltaic equipment