In 2022, the company's revenue increased quarterly, and the mother's net profit was under pressure. In 2022, the company achieved operating income of 4.14 billion yuan, +23% year on year; net profit of 0.8 billion yuan, -63% year on year; net profit of non-return mother was 0.5 billion yuan, -71% year on year. Corresponding to 22Q4, revenue was 1.36 billion yuan in a single quarter, +57% year on year, +31% month on month; net profit of the mother was -0.3 billion yuan, -727% year on year, -161% month on month; net profit after deducting non-return to the mother was -0.4 billion yuan, -1526% year on year, -202% month on month.
The photothermal glass business layout is expected to benefit from high demand and a sharp rise in volume profits brought about by high barriers in the industry. In March 2023, the National Energy Administration proposed that solar thermal power will start an additional 3 GW per year during the “14th Five-Year Plan” period. The scale of solar thermal installations and the demand for related equipment in China are expected to rise. In 2017, the company broke the technology monopoly of Japan's Asahi Glass and developed its own 3mm and 4mm photothermal ultra-white float glass substrates. The full spectral transmittance reached more than 91%, and the main quality performance indicators such as elastic modulus, weather resistance, and Mohs hardness all reached the advanced level of peers. Currently, the production capacity of photothermal glass in the industry is limited. The industry barriers are high and the competitive pattern is stable. Under production capacity, Asahi Glass and Ancai Hi-Tech each account for about half of the market. In the future, the company is expected to benefit from the high demand for glass brought about by the rapid development of photothermal power generation and achieve a sharp rise in quantitative profit.
Shipment structure optimized+raw material prices fall, and the gap between the gross margin of photovoltaic glass and leading companies continues to narrow.
The company optimized the sales product structure, increased the proportion of 2.0mm photovoltaic glass shipments with high gross margin, and actively deployed quartz sand processing production capacity. The gap between the overall gross margin of the photovoltaic glass business and the first tier continued to narrow. The gross profit margin of the company's photovoltaic glass in 2022 was 17%, 6/6 pcts lower than industry leaders Xinyi Solar and Follett, and the gap narrowed 10/5 pcts year over year. Starting in 2023, as the price of silicon materials drives profit recovery in the module chain, the capacity utilization rate of the glass industry is expected to increase; when combined with the price of soda ash and natural gas, the profitability of photovoltaic glass will experience marginal improvement.
Profitability is expected to improve further with the sale of assets related to the LNG, CNG trade, and gas station business. The company plans to sell 100% of Henan Ancai Gas's shares and LNG and CNG business assets operated by the company to the controlling shareholder Henan Investment Group or its holding subsidiaries. The transaction will be completed by the end of June 2024. After the transaction is completed, the company will gradually shift its business focus to businesses such as photovoltaic glass, photothermal glass, and pharmaceutical glass with higher technical added value and gross margins, and profitability is expected to improve.
Risk warning: the risk of PV glass production and sales falling short of expectations; the risk of increased competition in the industry; the risk that the company's cost reduction falls short of expectations; the risk that the bidding and construction of photothermal projects will not advance as expected.
Investment advice: We expect the company to achieve operating income of 4,886/55.6/6.80 billion yuan in 2023-2025, an increase of 17%/15%/22% over the previous year; achieve net profit of 2.58/3.40/501 million yuan, an increase of 232%/32%/48% over the previous year. The current stock price corresponding to PE is 29/22/15 times, respectively. Considering the FCFF valuation and relative valuation, we believe that the reasonable valuation range for the company's stock price is 6.99-7.44 yuan, which corresponds to the dynamic PE range of 2023, 29-31 times, which is 2%-9% of the company's current stock price. The first coverage gave an “increase in holdings” rating.