Ancai Hi-Tech released three quarterly results: in 2022, Q3 achieved operating income / return net profit of 1.038 billion yuan in a single quarter, compared with the same period last year, which was 53.68% compared with the same period last year; in the first three quarters, it realized operating income / return net profit of RMB 2.788 billion, compared with the same period of last year, + 11.22% and 49.99%, respectively.

Main points of investment

Overall performance continued to improve, with costs rising slightly during the period

The company's Q3 performance continued to improve, revenue and profits showed a large increase compared with the same period last year. The company's Q3 gross profit margin level is 13.83%, month-on-month ratio + 1.16pct, net interest rate level is 4.86%, month-on-month ratio + 0.22pct. The company's Q3 expense rate during the single quarter was 6.97%, year-on-year-2.56pct, month-on-month + 1pct, slightly higher than the same period last year. Among them, the sales expense rate is 0.49%, the month-on-month ratio is-0.34pct, the management expense rate is 3.47%, the month-on-month ratio is + 0.98 pct, the R & D cost is 2.2%, the month-on-month ratio is + 0.27pct, and the financial cost is 0.81%, the month-on-month ratio + 0.09pct.

The asset-liability ratio has increased slightly and short-term liquidity has improved

By 2022 Q3, the company's asset-liability ratio was 63.71%, compared with H1 in 2022, the growth + 1.34pct, the asset-liability ratio level increased slightly; but the company's short-term liquidity improved. By 2022 Q3, the company's liquidity ratio was 1.05, compared with 2022H1's 0.87, slightly higher. The net cash flow generated by the company's Q3 single-quarter operating activities in 2022 was-260 million, with a net current ratio of-25.05, which decreased significantly compared with the same period last year, mainly due to the increase in purchasing costs caused by the high price of raw materials upstream of the company and the increase in cash paid to employees in the Q3 quarter.

The company's path of cost reduction is clear, and the level of gross profit margin is expected to increase.

On the basis of maintaining the leading advantage of low cost of natural gas, the company carries out quartz sand mine acquisition and ore processing, soda ash strategic procurement and other aspects of work to achieve cost reduction and efficiency, with a clear cost reduction path, which is expected to promote the level of gross profit margin. The company has carried out natural gas sales business for a long time, and the natural gas supply is ample. Due to the small scale of photovoltaic glass business, the proportion of natural gas for self-use is only 15.54%. Subsequently, the expansion of production capacity and the increase of the proportion of natural gas for self-use will further highlight the low-cost advantage of natural gas. In June 2022, the company signed a "cooperation agreement" for quartz sand mines to acquire Changzhi Zhenghe Mining Co., Ltd. and its assets in the mining area, with reserves of 1.2341 million tons and production scale of 100,000 tons per year. The mined quartz sand can be used in the company's glass production line after processing. It is estimated that after the completion of quartz sand processing facilities, the proportion of self-mined quartz sand is expected to reach 17.15%. In addition, the price of soda ash has dropped from a high of 3600 yuan / ton in 2021 to about 2700 yuan / ton in the near future, and the price is low. It is expected that the subsequent price will remain at a low level. The company itself is also active through strategic procurement, the combination of future and cash to reduce its procurement costs.

Capacity expansion + increased downstream demand, the company's performance is expected to improve the company to actively promote project construction, Jiaozuo, Xuchang project production lines connected, daily melting capacity increased from 900t/d to 2700t/d, production capacity ranks in the forefront of the industry. At the same time, on the basis of the production and operation of the existing three projects, the company will carry out the demonstration and preparation of Xuchang Phase II and Anyang Phase II photovoltaic glass projects, pay attention to the layout of the photovoltaic industry chain in the northwest, and plan the investment and construction of photovoltaic glass projects in Qinghai and other places. With the progress of the project, the company's production capacity is expected to be further increased. Due to the upstream raw material prices rise downstream, the recent photovoltaic glass prices rebounded to 28 yuan / square meter, close to the highest value of the year, in addition, October 31, TCL Central Silicon Wafer prices across the board, is expected to follow with the gradual release of silicon production capacity, prices are expected to continue to fall, promoting downstream component customer terminal delivery demand to rise. With the production of downstream components and the discharge of centralized power stations, the demand for photovoltaic glass is expected to continue to rise, driving prices to continue to rise. The expansion of production capacity and the increase in downstream demand pushed up prices, and the rise in volume and price boosted the company's performance growth.

Continuously promote technology research and development, and the prospect of medicinal glass is promising.

The company plans to set up an Cai Glass Research Institute to carry out glass-related technology research and development, implement the introduction of talents, strengthen independent research and development and industry-university-research cooperation, and promote the upgrading of existing industries on the basis of integrating internal technical personnel and R & D resources. Combined with the company's overall strategy, the layout competition pattern is better and the development prospect of the high-end glass market is better. At the same time, the company started the construction of medicinal glass project in April 2022, which is expected to be ignited in the first quarter of 2023. There is a large demand space for drug glass replacement driven by policy. With the gradual progress of the company's pharmaceutical glass project, it is expected to contribute a new growth curve to the company's performance.

Profit forecast

The forecast company's income from 2022 to 2024 is 47.31,56.89 and 6.64 billion yuan respectively, and the EPS is 0.31,0.43,0.61 yuan respectively. The current stock price corresponding to PE is 21.7,15.5,11.0 times, maintaining the "buy" investment rating.

Risk hint

1) the project production progress is not as expected; 2) the cost reduction is not as expected; 3) photovoltaic glass overcapacity; 4) raw material costs continue to rise; 5) photovoltaic installed capacity is lower than expected.