An overview of events. The company released a semi-annual report that 23H1 achieved revenue of 3.715 billion yuan, year-on-year-0.29%, net profit of 261 million yuan, year-on-year-28.52%, comprehensive gross profit of 16.86%, year-on-year-2.16pct; split 23Q2 realized revenue of 1.81 billion yuan, year-on-year-6.85%, return-to-mother net profit of 173 million yuan,-21.30%, comprehensive gross profit of 20.53%, year-on-year-1.11pct. The net cash flow of operating activities was 517 million yuan,-31.3% of the same period last year. The results are in line with market expectations, and the stable performance in the first half of the year is mainly due to the strong demand for soda ash, the low cost of original combustion and the continuous development of photovoltaic glass business at home and abroad.
Float glass performance under pressure, demand cost marginal improvement. 23Q2 glass product price center of gravity moved steadily upward, from the beginning of the year to April, the end of half a year of price decline, stabilized and rebounded, to the end of June, the industry average price rose nearly 400 yuan / ton compared with the end of last year, according to Zhuochuang information, Q2 price entered the May price increase year-on-year has entered a positive growth, but the absolute position is still low, most of the industry profits are under pressure. The income of 23H1 Tengzhou Jinjing is 678 million yuan, the net profit is-23.58 million yuan, and the net interest rate of 23H1 is-3.48%. The relatively high production cost of the company's Shandong base is one of the main reasons for the loss. On the demand side, driven by the Baojiao building policy, the real estate completion end warms up, and the demand for home decoration increases, pushing glass prices upwards. we believe that soda ash prices have fallen significantly since May. Superimposed fuel prices are low. Float costs in May and June because soda prices fell will have gross profit growth of 100-200 yuan / ton, as demand gradually picks up, prices are expected to continue to repair and drive profits to pick up this year.
? Supply and demand is tight and the original combustion is low, soda ash supports the performance. Haitian, a subsidiary of 23H1, has an income of 1.78 billion yuan, accounting for 47.93% of the total income, with a net profit of 279 million yuan and a net interest rate of 15.69%. At the end of 23H1, the domestic soda ash production capacity was about 31.78 million tons, which was 2% lower than that at the end of 2202, and the supply of 23H1 was tight, and the profits of the industry remained high. From January to June of 23, the output of soda ash industry was 15.695 million tons, which was + 7.4% compared with the same period last year. 1) inventory low: although soda ash market prices fell sharply away from short-term supply and demand factors in May 23, 23H1 inventory remained low and continued to decline. According to Longzhong statistics, the inventory level on August 24 is the lowest in the past three years. 2) Price end: the price of heavy soda ash rose steadily from about 2700 yuan / ton at the beginning of this year to a high of nearly 3000 yuan / ton at the end of April. at the beginning of May, under the influence of sentiment, the price quickly fell back to about 2000 yuan / ton, with a price difference of 1000 yuan / ton. At present, the price is up 200 yuan / ton compared with June; we believe that due to the decline in the price of 23H1 raw fuel, the decline in production capacity, the decline in inventory, the stabilization of downstream demand and other factors help the company's soda ash business to achieve a high level of profitability. We expect that the profit of soda ash Q3 will continue to be repaired this year under the support of low inventory.
Photovoltaic glass domestic business turned into profit, overseas business profit is considerable. Ningxia Jinjing achieved an income of 374 million yuan, a net profit of 13.3 million yuan and a net interest rate of 3.55%. The domestic photovoltaic glass market is facing the pressure of intensified competition in the industry. The production capacity of 23H1 photovoltaic glass has increased rapidly, from 84,000 tons / day (the end of 22M12) to 90,000 tons / day (the beginning of 23M7). The average price of photovoltaic glass with 23H1 size 2mm/3.2mm is 18.5x25.6 yuan / square meter, which is-11.7% and 5.4% compared with the same period last year. From a long-term perspective: the photovoltaic glass industry is in the upstream period, the demand support is still there, and the profit level is still upstream; in addition, with the expansion of the company in the field of new energy, the company's TCO products have a leading advantage in the domestic market share of perovskite and cadmium telluride, and the future demand is highly deterministic. Malay profit release: Malay Jinjing 23H1 achieved an income of 263 million yuan, a net profit of 25.24 million yuan, a net interest rate of 9.59%, and its profitability was significantly higher than that of domestic photovoltaic business. In May this year, Malay Gold Crystal thin film photovoltaic module glass back plate second-line ignition, production 600t/d.
As of 23M6, the construction progress of the photovoltaic glass production line of the company's Malay base has reached 96.12%, and the contribution to the performance of the two-line operation in the second half of the year is expected to be more obvious. Looking to the future, we judge that both domestic and foreign bases have the possibility to further expand production capacity.
Investment suggestion
Considering the influence of factors such as glass demand and price still under pressure at this stage, the company's operating income forecast for 2023-2024 is reduced to 8.925 billion yuan (original 11.39 billion yuan), the net profit is reduced to 713,847 million yuan (formerly 1.616 billion yuan), and EPS 0.50 pound 0.59 yuan (original 1.13 pound 1.40 yuan). The new 2025 operating income and home net profit forecast is 11659 million yuan, EPS 0.70 yuan, 2023-2025 EPS corresponding to the August 28 closing price of 7.16 yuan 13.95/11.75/9.94xPE, maintaining the "buy" rating.
Risk hint
Demand is lower than expected, cost is higher than expected, production is not as expected, systemic risk.