Event: Jin Jing Keji released its third quarterly report in 2023. In the first three quarters of 2023, the operating income was 5.804 billion yuan, an increase of 2.14% over the same period last year; the net profit was 423 million yuan, an increase of 1.82% over the same period last year; and the net profit was 425 million yuan, an increase of 3.96% over the same period last year.

The company's performance growth rate became positive, and the float glass business recovered steadily: the company's 2023Q3 realized operating income of 2.09 billion yuan, an increase of 6.76% over the same period last year and 15.43% over the same period last year; the net profit of returning to the mother was 162 million yuan, an increase of 224.39% over the same period last year, a decrease of 6.78%; and a net profit of 168 million yuan, an increase of 241.42% over the same period last year and a decrease of 2.83% over the previous month. In the first three quarters, the year-on-year growth rate became positive, and the company's business performance improved.

In terms of float glass business, in 2023, due to the recovery of real estate completion, the market demand for float glass improved, prices rebounded, and the company's performance was enhanced. According to Zhuochuang data, the daily average price of 2023Q3 domestic float glass is 2035.41 yuan / ton, an increase of 18.59% over the same period last year. In addition, the price of float glass has continued to rise since July. As of October 23, the average daily price of domestic float glass was 2142.82 yuan / ton, an increase of 11.43% over early July. It is expected that with the advent of the peak season for completion in the fourth quarter, the market demand for float glass will continue to pick up and prices are expected to rise. In terms of soda business, 2023Q3 domestic soda price is weak, and the average price of Q3 domestic heavy soda market is 2460.11 yuan / ton, down 12.82% from the same period last year and 1.2% from the previous month. Although the price of heavy soda soda rebounded in September, it is expected to decline gradually with the gradual expansion of the new production capacity of soda ash. The company's soda ash business performance in the fourth quarter may be under pressure.

Q3 gross profit margin remained high, and the expense rate increased slightly: in the first three quarters of 2023, the company's sales gross profit margin was 18.16%, year-on-year + 1.28pct, of which Q3 gross profit margin was 20.46%, year-on-year + 7.66pct, month-on-month ratio-0.07pct; in the first three quarters, the net sales margin was 7.37%, year-on-year + 0.09pct, of which Q3 net profit margin was 7.86%, year-on-year + 5.33pct, month-on-month-1.80pct. In the first three quarters of 2023, the company's period expense rate was 7.98%, year-on-year + 0.01pct, of which the sales / management / R & D / financial expense rate was 0.58%, 2.99%, 2.90%, 1.514%, respectively. Year-on-year-0.09pctCompact, 0.05pctripple, 0.07pctUniverse, 0.13pct; among them, Q3 single-quarter expense rate is 9.67%, year-on-year + 0.13pct, month-on-month + 1.73pct.

The technical transformation of TCO glass production line has been completed, which has become a new profit growth point: TCO glass, namely transparent conductive oxide coated glass, has good light transmittance and electrical conductivity, and is one of the important materials for perovskite battery, cadmium telluride thin film battery and BIPV building power generation curtain wall substrate. In September 2023, Tengzhou Jinjing second line 600T/D glass production line was completed and successfully ignited, upgraded to TCO glass production line, the products are mainly located in the upstream of photovoltaic field. The release of new production capacity of TCO Glass will provide a new profit growth point for the company's follow-up performance.

Investment advice: the fourth quarter is the peak season for completion, the demand and prices of architectural glass are expected to continue to rise; the release of new production capacity of TCO glass is expected to bring new performance increments for the company; soda ash prices decline in the fourth quarter, glass gross profit margin is expected to increase, and the company's Q4 performance is expected to develop steadily. However, taking into account the subsequent soda ash prices are expected to continue to decline, to a certain extent affecting the company's soda ash business gross margin, as well as next year's real estate completion end of the weak operation, we slightly downgrade the company's profit forecast. It is estimated that the 23-25 net profit of the company will be 6.22 billion yuan, or 0.44 billion yuan per share, or 0.57 billion yuan per share, and the corresponding price-to-earnings ratio will be 15.45 pounds, 11.87 pounds, 8.81 times. Maintain the "recommended" rating based on the company's good development expectations.

Risk hints: the risk of lower-than-expected recovery of downstream demand; the risk of higher-than-expected fluctuations in raw fuel prices; and the release of lower-than-expected risks in the company's production capacity.