3Q23 performance is in line with our expectations
The company announced 3Q23 results that 1-3Q achieved revenue of 4.731 billion yuan, year-on-year + 40.27%; net profit of 198 million yuan, compared with-24.19% of the same period last year; revenue of 1.952 billion yuan in a single quarter, + 92.08% year-on-year and + 44.37%; net profit of 69 million yuan, + 427.74% and-40.57%, corresponding to 0.11 yuan per share, which is in line with our expectations.
Trend of development
3Q23 in the improvement of component production, the marginal upside of demand for glass prices increased significantly, promoting the company's profit repair significantly. The company's Q3 gross profit margin is 12.72%, year-on-year + 2.07ppt, month-on-month + 1.18ppt. We think the main reason is that the demand for component scheduling has improved, and the glass price has increased. In August and September, the average price of the photovoltaic glass industry has increased by 3-3.50 yuan per square meter. Although the cost of soda ash and natural gas has gone up, the company has improved its cost advantage through the following aspects: 1) the Zigong area uses pipeline natural gas. Gas price is lower 2) soda ash is collected through the medium building materials platform, and the purchase price in large quantities is low; 3) kiln process optimization to improve the yield; 4) reasonable management and control of inventory cycle. To sum up, the price increase of the company's glass products is greater than the upward range of costs, and the expansion of production capacity of the superimposed company makes the scale advantage increasingly prominent, and the dilution expense rate is 7.71% during the first three quarters, year-on-year-0.46ppt, so the profit repair is obvious quarter by quarter.
The approval of the new project is smooth, and it is optimistic that the company's shipments will increase rapidly and its market share will increase steadily. According to Zhuochuang, a new Yixing 850t / day production line was ignited in May this year, with a total production capacity of about 5500 tons / day. In the case of increasingly tight production capacity restrictions in the industry, it is better for the company to get approval for the project. According to the information published by the Ministry of Industry and Information Technology, our statistics show that the approved project of the company has reached 9600 tons per day, and the reserve of the new project is sufficient, reflecting a strong operating strength. We expect the company to fire the production lines of Zhangzhou and Luoyang next year, and the production capacity is expected to reach 10000 tons / year. At the same time, in the case of low component prices, the centralized ground power station is expected to release volume quickly, the permeability of double glass components will increase, and the demand for 2.0mm glass suitable for double glass components will increase, while the company's 2.0mm glass accounts for more than 85%, and shipments are expected to continue to increase. We expect the company's shipments to reach 3-350 million square meters this year, a year-on-year increase of 30%, 52%, and is optimistic that the company's market share will further increase.
Profit forecast and valuation
We keep the 2023Universe 2024 profit forecast of RMB 695 million unchanged. The current A share price corresponds to the 2023x2024 21xPhelex Emaine H share price corresponding to the 2023Universe 6xPMaE 20246xPpound E. Maintain the outperform industry rating, maintain the A-share 18.98 yuan target price, corresponding to 2023Universe 2024 30max 18x Pamp E, 41% upside compared with the current share price; due to the poor mood in the Hong Kong PV sector, the valuation center has moved down sharply, we lowered the H-share price by 32% to HK $5.60, corresponding to 2023x2024 8/4xP/E, which has 36% upside compared with the current share price.
Risk
The photovoltaic installation is not as expected, the construction progress of the new project is not as expected, the risk of policy fluctuation, the risk of raw material price fluctuation.