Event: The company released the 2023 three-quarter report. 23Q1-3 achieved revenue of 4,046 billion, +45.1%, net profit of 36 million, -65.4%, gross profit margin of 9.5%, y-2.3 pct; single Q3 revenue of 1,434 million, +38.1%, month-on-month, +3.1%, net profit of 0.03 billion, -92.6%, -86.1% month-on-month, gross margin of 10.0%, y-2.7pct, +pct month-on-month.
Business analysis:
The year-on-year decline in profit for the first three quarters of 2023 was mainly due to the impact of low levels of photovoltaic glass prices and cost fluctuations during the reporting period, resulting in a 2.7 percentage point year-on-year decline in the company's comprehensive gross margin for the first three quarters.
Net profit for 2023Q3 declined month-on-month, mainly due to fluctuations in expenses during the period. The cost ratio for the Q3 period increased by 7.1% month-on-month by 2pct, eroding profits of nearly 30 million.
Looking ahead to the follow-up:
Look at the photovoltaic glass business:
The lifting of ground power plants supports the increase in demand for downstream components, effectively boosting glass shipments. At the same time, looking at the cost side, the gas price trend during the heating season is rising, but the soda ash trend shows a downward trend with the release of new production capacity. Combined with the release of new production capacity, the Jiaozuo silicon-based new materials project was put into production for half a year to provide qualified quartz sand, so it is expected that gross margin will be repaired in the future. In addition, the company issued an announcement in September to invest in the construction of a 20,000 ton sodium pyroantimonate project, divided into one or two phases (10,000 tons each) to further strengthen supply chain control and enhance the profit center after production is put into operation.
See other sections:
(1) The company actively explores the downstream photothermal market, and recently signed a 40,000 ton photothermal glass supply contract, which is gradually delivered; (2) the pharmaceutical glass project has been promoted smoothly, mass production has been achieved, and has fully entered the process adjustment and optimization stage. In addition, the company issued an announcement in September to invest in the construction of the borosilicate pharmaceutical glass bottle project (annual production capacity of 300 million medium borosilicate pharmaceutical glass bottles). The project is downstream of the pharmaceutical glass tube project, further extending the company's industrial chain in the pharmaceutical packaging industry and enhancing product competitiveness; (3) The Yuji line connection project has achieved full line integration and ventilation conditions (4;) and subsequent relocation of the Low-E production line The upgrade is expected to continue to empower the company's development.
Profit forecast and investment rating: We expect to achieve net profit of 0.5/1.8/220 million yuan in 23-25 respectively (previous forecast value 1.8/28/3.2 billion), -40%/+288%/+19% year-on-year. The current stock price corresponding to PE is 113.1/29.1/24.4 times, respectively. Considering the large fluctuations in the company's performance, the rating was adjusted to a “increase in ownership” rating (on the one hand, the overall supply of the industry this year was greater than demand. The price of photovoltaic glass was under pressure in the first half of the year, and the company, as a second-tier photovoltaic glass company, had relatively insufficient cost control As a result, gross margin fell short of expectations; on the other hand, due to the impact of the hearing review this year, the opening of the company's glass production line fell relatively short of expectations, so the company's performance was revised downgraded, and the company's rating was further adjusted).
Risk warning: industry demand falls short of expectations; market competition intensifies; upstream raw material prices fluctuate; production capacity progress falls short of expectations, etc.