Introduction to this report:
The company's 2023 mid-year report was in line with expectations. In the Q2 glass sector, floating profit improved, and effective photovoltaic production capacity increased, but silicon profit may have narrowed month-on-month.
Key points of investment:
Maintain the “increase in holdings” rating. The company Q2 achieved revenue of 4.319 billion yuan, +15.67% year-on-year, net profit of 469 million yuan after deducting non-attributable net profit of 469 million yuan, or -1,494% year-on-year, in line with expectations. Considering the decline in the average price of silicon materials from month to month, the EPS in 2023-25 was lowered to 0.60 (-0.14) /0.64 (-0.24) /0.78 (-0.36) yuan, which is 12 times that of the company's PE in 24, and the target price was lowered to 7.68 yuan.
Glass sector: Float profits have improved, and effective photovoltaic production capacity has increased. 23H1's glass sector (including floating/engineering/photovoltaic glass) achieved revenue of 6.335 billion yuan and net profit of 480 million yuan.
The company's float glass maintains industry-leading profit levels and effectively hedges float fluctuations through high-end processing. At the same time, the production capacity expansion of photovoltaic glass in the second half of '22 was able to release profits at 23H1. According to Zhuochuang data, up to now, the company's photovoltaic glass production capacity has reached 7470 t/d.
Q2 The profit contribution of silicon materials may be narrowing. 23H1's solar energy and other sectors earned 1,585 million yuan and achieved net profit of 356 million yuan. Among them, the announcement revealed that Yichang Nanbo Silicon Materials Company's net profit was 333 million yuan, meaning that silicon still contributed most of the profits of the solar sector. According to Baichuan Information, the average price of 23Q1 polysilicon is 210,000 yuan/ton, and the average price of 23Q2 polysilicon is 140,000 yuan/ton. Since entering Q3, the price of silicon has dropped to 60,000 yuan/ton, breaking the cost line of most second-tier and third-tier companies. The company's old silicon production capacity in Yichang is high in electricity prices in Hubei, so the Q3 silicon sector may be under a lot of profit pressure.
Competition for electronic glass intensifies. 23H1's electronic display sector achieved revenue of 7.2 million yuan and net profit of 115 million yuan. The profitability of electronic glass continued to decline, the consumer electronics market continued to be sluggish, and the accelerated expansion of domestic electronic glass production capacity led to increased competition.
Risk warning: Demand for real estate completion has declined sharply, and the increase in the supply of photovoltaic glass has exceeded expectations.