Events:

The company released its semi-annual report for 2023. 2023H1 achieved an operating income of 2.612 billion yuan, an increase of 49.28% over the same period last year, and a net profit of 33 million yuan, down 46.52% from the same period last year.

Comments:

The scale of revenue is growing steadily and profitability is still under pressure. 2023H1, the company seizes the market opportunity, strengthens the market development strength, realizes the revenue scale growth steadily, but by the raw material cost high, the product price low fluctuation influence, the profitability continues to bear the pressure. 2023Q1/Q2, the company achieved revenue of 1.222 billion yuan / 1.39 billion yuan respectively, an increase of 57% to 43% over the same period last year, and a net profit of 10 million yuan / 23 million yuan for the same period, down 48% to 46% and 2023H1 to 2023H1, respectively. The company achieved a sales gross profit margin of 9.19%, reducing 2.54pct over the same period last year.

Photovoltaic glass business revenue increased year-on-year. In the face of the development trend of lightweight and large-size photovoltaic modules, the company focuses on market preferences, optimizes product structure, continuously increases the proportion of 2.0mm products, and actively adjusts its marketing strategy to increase the sales share of downstream head enterprises to more than 60%.

The company's 2023H1 photovoltaic glass business achieved revenue of 1.58 billion yuan, an increase of 123% over the same period last year.

The short-term demand for float glass is limited and the long-term space is good. The company's 2023H1 float glass business achieved revenue of 190 million yuan, down 15.4% from the same period last year. In terms of ultra-white float glass, according to Zhuang Chuang's statistics, as of 2023H1, the national production capacity of float glass is 176,000 t / d, of which 13000 t / d is ultra-white float glass, and the company's ultra-white float glass production capacity is 600t/d, with a market share of about 4.74%. Ultra-white float glass is mainly used in high-end commercial buildings, we expect the long-term demand is more optimistic. In terms of photothermal glass, according to the goal put forward by the National Energy Administration in April 2023, during the 14th five-year Plan period, China will strive to increase the scale of construction every year to reach about 3GW. As a small number of domestic enterprises that mass produce photothermal glass, the company's photothermal technology is expected to benefit from the construction of photothermal power stations.

The development of natural gas and pipeline transportation is stable, and the business of medicinal glass is actively cultivated. The company's 2023H1 natural gas and pipeline transportation business achieved revenue of 830 million yuan, an increase of 2.38% over the same period last year. In the future, the company plans to steadily operate the west-to-east gas transmission line and develop the tanker transportation business. In terms of pharmaceutical glass business, the company's neutral boron-silicon glass tube phase I project has successfully produced good products, and plans to promote the drug glass phase II project to achieve a capacity of 10,000 tons per year, and integrate the relevant resources of Henan medicinal glass market.

Maintain the "overweight" rating. Considering the pressure of short-term demand for float glass, the profit forecast is revised downwards. It is estimated that the EPS from 2023 to 2025 is 0.09 and 0.11, and the corresponding PE is 54.34 and 46.60, 39.83 times.

Risk hint: photothermal power station investment is not as expected, new business expansion risk, performance is not as expected