Description of the event

In the first half of 2023, the company achieved revenue of 8.389 billion yuan, an increase of 28.7%; realized attributable net profit of 889 million, a decrease of 11.2%; achieved net profit of 838 million yuan without attribution, a same decrease of 5.6%.

Among them, Q2 achieved revenue of 4.319 billion yuan, up 15.7% year on year; net attributable profit of 493 million, down 20.1% year on year; net profit of non-attributable income of 469 million, down 14.9% year on year.

Incident comments

PV emissions, revenue growth. Revenue in the first half of the year increased by 28.7%. By sector, the glass industry (float, photovoltaics, energy-saving glass) achieved revenue of 6.335 billion dollars, 43.05%, sector net profit of 480 million, down 19.87%, mainly affected by the downturn in the float boom; under pressure from the consumer electronics industry, the electronics and display sector achieved revenue of 7.2 billion yuan in the first half of the year, down 11.1% year on year, net profit of 115 million yuan, down 86.6% year on year. Mainly affected by rising raw material prices and increased competition in the industry; the solar sector benefited from the resumption of polycrystalline production in Yichang and the high outlook In the first half of the year, we achieved total revenue of 1,585 billion yuan, a year-on-year increase of 10.53%, and net profit of 356 million yuan, an increase of 26.24% over the previous year. In the first half of the year, we achieved a gross profit margin of 22.6%, a year-on-year decrease of 6.3 pct; an expense ratio of 10.8%, a year-on-year decrease of 1.2 pct. Due to a decrease in government subsidies, other income for the current period decreased by 52.1 million yuan over the same period; in the end, the net interest rate attributable to the full year was 10.6%, a decrease of 4.8 pct.

Q2 Profit pressure is still high. Q2 achieved a revenue increase of 15.7% in a single quarter; achieved a gross profit margin of 22.9%, down 6.4 pcts from the previous year. We determined that the main flotation boom had rebounded, or was mainly due to the year-on-year decline in polysilicon prices; the rate for the period was 11.0%, down 0.3 pct from the previous year, with management and sales rates falling 0.2 to 0.3 pcts year-on-year. In the end, the net interest rate on ownership was 11.4%, down 5.1 pct from the previous year.

The layout of the entire photovoltaic industry chain. As of June 2023, the company has 7 photovoltaic rolled glass kilns and supporting photovoltaic glass deep-processing production lines in Dongguan, Wujiang, Fengyang and Xianning, with an annual output of about 2.72 million tons of original photovoltaic rolled glass sheets. The products cover deep-processing products with a variety of thicknesses of 1.6-4mm. In May 2023, the Fengyang No. 4 kiln was successfully ignited; the company is building two photovoltaic glass production kilns with a melting capacity of 1,200 tons per day in Beihai and supporting processing lines are being built in an orderly manner according to the plan. As of June 2023, the scale of production capacity has successfully ranked among the highest in the industry.

The advantages are obvious, and I'm looking forward to improvements in electronic glass. Beginning in 2021, high-alumina second-generation KK6 glass progressed smoothly and began to be widely used by high-end domestic brand customers; in the first half of 2023, the company's high-alumina second-generation (KK6-P) products continued to achieve mass production and delivery among new customers, indicating that the company has firmly established itself among high-end domestic customers. Hebei Window's new ultra-thin electronic glass production line with a melting capacity of 110 tons per day has entered the preparation stage before commercialization. At present, CSG Electronic Glass has completed comprehensive coverage of electronic glass products in various high and low end application scenarios, forming a more consolidated supply chain system based on market competition.

Investment suggestions: Electronic cover glass is expected to lead the domestic substitution trend; the photovoltaic business may be rapidly released and enter the first tier; engineering glass is positioned at a high end and production capacity is expanding rapidly; in the new cycle of flotation, the economy will continue to increase. The estimated performance in 2023 is 1.8 billion, corresponding to 10 times PE.

Risk warning

1. The production capacity of cold restoration increased more than expected;

2. The pace of restoration of real estate completion is expected to be low.