① Q3 performance exploded. Follett management said that there is still uncertainty on the Q4 cost side; ② industry analysts pointed out that Q4 photovoltaic glass manufacturers' profits are expected to decline further; ③ As revenue continues to grow, the company's poor net operating cash flow performance has raised questions from investors.
Financial News Agency, November 6 (Reporter Luo Yichen)After saying goodbye to the lackluster performance in the first half of the year, PV glass leader Follett (601865.SH) achieved a performance explosion in the third quarter, which also followed the trend and raised market expectations for its Q4 performance. Regarding the last quarter's market, the company's management responded at the performance briefing held today that the September price increase has basically been negotiated, but there is still uncertainty about the cost of raw materials.
According to the company's management, in the fourth quarter, the price of soda ash, the main raw material, showed a downward trend compared to the third quarter, but at the same time, fuel prices were on the rise as they entered the peak heating season, so the overall cost trend was unclear.
Wang Shuai, a photovoltaic analyst at Zhuochuang Information, told a reporter from the Financial Association that the photovoltaic glass market in the fourth quarter is unspeakably optimistic, and it is expected that manufacturers' profits may shrink further. “Currently, the supply of photovoltaic glass is quite sufficient, while overseas orders have been reduced, the progress of some domestic terminal projects has slowed down, overall support on the demand side has weakened, and the inventory of photovoltaic glass manufacturers has increased to varying degrees. Overall, various parts of the cost side have risen and fallen. Coupled with the loose transaction price of photovoltaic glass, profit is expected to decline in the fourth quarter.”
At the meeting, investors asked a series of questions about the company's product prices and raw material costs, all pointing to the company's gross margin performance.
A reporter from the Financial Association News Agency noticed that along with drastic changes in the supply and demand pattern of the photovoltaic glass industry, the company's gross sales margin has experienced a round of sharp contraction, declining all the way from about 50% of the peak period in early 2021. It has generally stabilized at more than 20% in the past two years, and the trough period in the first half of this year once fell below 20%. By the third quarter, along with a sharp year-on-year increase in performance, its gross sales margin had also picked up markedly, returning to around 25%.
At present, the competitive environment in the photovoltaic glass industry is unlikely to improve in the short term, and Follett's gross sales margin of around 20% is likely to continue for a long time. Faced with the Financial Services Association reporter's question, “It's very difficult for a company to gain a clear advantage in terms of gross profit, but can it make a breakthrough in operational efficiency?” In response to this question, Chairman Ruan Hongliang did not explain Maori further, stressing that he will continue to work to improve technology, improve kiln technology, reduce the overall energy consumption of units, and improve operational efficiency.
In addition to anxiety about gross profit from sales, some investors have clearly expressed dissatisfaction with the company's operating cash flow performance in recent years, saying, “Since 2022, the ratio of cash received by the company to revenue from sales products has declined sharply. Is this related to the fact that bill discounts are included in fund-raising cash flow?” In response to this, the company's finance manager only responded that bill discounting is separately included in fundraising cash flow and operating cash flow according to different bank credit ratings, but did not explain the exact scale.
Financial data shows that as the scale of revenue continues to grow, Follett's net operating cash flow has fluctuated. In the first three quarters of this year, the company achieved revenue of 15.885 billion yuan and net profit of 1,969 billion yuan, a year-on-year increase of more than 30%. However, in the same period, although net operating cash flow improved quarter by quarter, the overall level of net operating cash flow was negative.