Events:
Southern Glass A released three quarterly reports for 2022, Q1-3 realized operating income / net return to home / deduction of non-return net profit 108.04 yoy+5.44%/9.32%/1.05% 1.451 billion. Among them, Q3 realized income / return net profit / deduction of non-return net profit of 42.84 million yoy+17.97%/312.78%/336.67%.
Q3 home net profit has increased compared with the previous month, which we believe is mainly due to the performance impact of the silicon business to make up for the price reduction of float glass.
The Q3 float revenue is about 1.25 billion yuan, and the float unit net profit is still at the bottom. According to our estimation, the company float glass 22Q3 revenue is about 1.25 billion yuan (the average price of Q3 glass is calculated by the average factory price of Chengdu Nanbo). From the industry level, the net profit of float unit is still hovering at the bottom since Q3. According to Zhuochuang Information, as of October 20, 22, the gross profit per ton of the industry reached-102 yuan / ton (pipeline gas caliber). We believe that with the recovery of downstream construction and the decline of soda ash prices, the net profit per box may have room for increase. In terms of photovoltaic glass, the average price of Q3 has fallen by about 3.6% (3.2mm caliber) from the previous month, while superimposed fuel costs have risen, so we expect the Q3 business to make a meagre profit.
The price of Q3 silicon is high and the decline of gross profit margin is limited.
22Q3's gross profit margin is 28.7%, year-on-year-8.7pct, month-on-month-0.6pct, mainly due to high fuel costs and falling float glass prices. According to Zhuochuang, the average price of 22Q3 Southern Glass float method is-42% year on year, month-on-month ratio-14% (Chengdu production line); 22Q3 heavy alkali year-on-year + 26.1%, month-on-month ratio-1.12%. The proportion of the company's high-end deep processing business is relatively high, and the gross profit margin of construction glass may be less affected by the glass price reduction than its peers.
In addition, 22Q1 has successfully resumed production of polysilicon with a capacity of 10,000 tons per year, and the average price of Q3 polysilicon is about 300000 yuan / ton (including tax). We expect that the company's Q3 gross profit margin is likely to be better than that of its peers and the main performance of Q3 contributes to the silicon business.
During the period, the expense rate was stable, and the operating cash flow decreased significantly.
The sales / management / R & D / financial expense rates of 22Q1-3 are 2.02%, 4.71%, 4.01%, 0.98%, and + 0.16%, 0.46%, 0.39%, 0.18%, respectively. Overall, the company has good cost control. To sum up, 22Q3 achieved a net interest rate of 15.2%, down 7.9pc from a year earlier (t plus last year's impairment) and 1.46pct from a month earlier.
The 22Q1-3 CFO was 1.62 billion yuan (2.6 billion yuan in the same period last year), and the operating cash flow decreased significantly, with a cash-to-cash ratio of 93%, a year-on-year ratio of-5.7 pct.
Investment suggestion: the company is an established glass enterprise. with the warming of float glass and the further development of electronics and photovoltaic glass, the visibility of follow-up growth is expected to increase. Based on the performance of Q3, we slightly raise our profit forecast and expect a 22-24 net profit of RMB 2.41 billion (the previous value is RMB 3.45 billion), corresponding to 6.7max of PE 8.4, maintaining the "Buy" rating.
Risk hint: the price of raw materials is higher than expected, the market at the end of completion in the second half of the year is lower than expected, and the company's production expansion is not as expected.