9M22 net profit up 81% y-o-y
- 9M22 net profit up 81% y-o-y to Rmb5bn (in-line)
- 9M22 gross margin compressed 1.9ppts (slightly below)
- Wafer production capacity up 45% to 128GW
- We currently rate TZE Buy with TP of Rmb72 under review
TCL Zhonghuan (TZE) announced 9M22 net profit grew 81% y-o-y to Rmb5bn, within the mid-range of the profit alert of Rmb4.93-5.07bn it had previously announced.
9M22 revenue grew 71% y-o-y to Rmb49.8bn, which represents 70% of our full year estimate, slightly lower than we had expected. Although TZE did not disclose sales volume, the demand backdrop remained supportive. China’s new solar installations rose 102% y-o-y and solar module exports rose 81% y-o-y in 8M22.
9M22 gross margin compressed 1.9ppts to 17.9%, below our full year estimate of c.20%. Margin compression was driven by elevated polysilicon prices, production disruption, and higher logistics costs.
As at Sep-22, TZE’s wafer production capacity reached 128GW, up 45% from 88GW in Dec-21. The company accelerated the development of its Ningxia Phase 6 wafer production facility. TZE is on track to achieve its target production capacity of 140GW by end of 2022.
We currently rate TZE BUY with TP of Rmb72 under review.
