Event: The company 22FY achieved revenue/net profit attributable to the mother/net profit after deducting non-net profit of 31.68/0.84/63 million yuan, YOY +55.92%/+54.81%/+362.88%. 23Q1 achieved revenue/net profit attributable to mother/ net profit of 8.1/0.16/0.09 billion yuan, yoy +14.62%/+41.7%/+130%.

The volume of photovoltaic glass released, electronic glass is in the expansion period

By business, Solar Glass 22FY achieved revenue of 2,881 million yuan, YOY +65.35%, electronic glass achieved revenue of 83 million yuan, YOY -24.4%, solar modules achieved revenue of 123 million yuan, YOY +15.22%, and the electricity sales business achieved revenue of 55.46 million yuan, YOY +4.52%.

Solar Glass 22FY sold 14,119 million square meters, YOY +95.8%. The main reason was that the company benefited from the rapid development of the photovoltaic industry and market demand for two-wheel drive, as well as the further release of processing capacity in Anhui. The company seized opportunities to improve production efficiency, optimize product structure, and increase production and sales of high-value-added products. The company's Benxi deep processing line will be put into operation in the second half of '23, and there is still room to increase the production capacity of ultra-thin glass in the future.

The sales volume of electronic glass and other glass products was 180,000 square meters, YOY +46%, the average price was 462 yuan/square meter, YOY -48%, and prices returned to normal levels in 21 years.

Gross margin declined slightly, and period expenses were well controlled

22FY's gross profit margin was 8.14%, down 0.17pct from the previous year. Among them, the gross profit margin of solar glass was 8.18%, down 0.79 pct from the previous year, mainly affected by the decline in the price of photovoltaic glass; the gross profit margin of the electronic glass and display business was -15.79%, down 12.79 pct from the previous year. 22FY's expense ratio for the period was 5.93%, a year-on-year decrease of 2.23pct. Among them, the sales/management/R&D/finance expenses ratio was -0.15/-1.51/-0.24/-0.57pct year-on-year respectively, achieving a net interest rate of 2.72%, a year-on-year decrease of 0.07 pct.

23Q1 gross margin declined month-on-month. It is estimated that the bottom of the stage profit may be the current 23Q1 company's gross profit margin of 6.88%, up 1.89 pct year on year, down 2.74 pct from month on month; net profit margin was 1.98%, up 0.34 pct year on year and down 0.83 pct from month on month. The month-on-month decline in profitability was mainly due to a decline in the average quarterly price of photovoltaic glass. At the beginning of April, there was an increase in the price of photovoltaic glass. We think the company's phased profit bottom may already be at the bottom; it is expected that the profitability of downstream companies will gradually pick up with the boom.

The logic of long-term increase in profitability still exists, maintaining that the “buy” rating company still has plans to acquire the parent company's original film in the future. Fengyang Silicon Valley still has construction targets for four 1,000-ton melting kilns per day. The plan is to complete construction in two phases. If the acquisition is successful, profitability is expected to increase dramatically after the acquisition.

Due to delays in asset injection, we lowered our profit forecast. The company's net profit for 23-25 is estimated to be 179/246/350 million yuan (previous value of 32/477 million yuan in 23-24), corresponding to PE 30/22/15 times, maintaining the “buy” rating.

Risk warning: PV installations fall short of expectations, company production expansion falls short of expectations, raw material price increases exceed expectations