The company published three quarterly reports. In the first three quarters of 2023, it achieved revenue of 5.804 billion yuan (+2.14%), net profit of 423 million yuan (+1.82%), net profit of 423 million yuan (+1.82%), net profit of 425 million yuan (+3.96%); in the third quarter, net income of 2,090 million yuan (+6.76%), net profit of 162 million yuan (+224.39%), net profit of 168 million yuan (+241.42%).

The increase in profit in the float glass and soda ash business led to an improvement in the company's performance. According to data from Zhuochuang Information, on November 2, the national average price of float glass was 2,191 yuan/ton, an increase of 435.20 yuan tons over the same period last year. Since the second quarter, the prices of float glass have all been higher than the same period last year. Even considering the rise in prices of raw materials such as soda ash, the profitability of float glass has improved compared to the same period. According to data from Zhuochuang Information, the price of soda ash experienced large fluctuations during the year, experienced a large decline in the second quarter, and remained at a low price of 2,200 yuan/ton for almost March. The price began to rise rapidly in late August, reaching a high of 3,261 yuan/ton. Since October 27, it has begun to fall rapidly again. On October 27, the national average price of soda ash was 2,661 yuan/ton, and the downward trend continued. Looking ahead to the fourth quarter and next year, with the gradual release of additional soda ash production capacity, the price of soda ash will still drop further, and the company's soda ash business may be under pressure.

The completion of the second-tier upgrade in Tengzhou is expected to contribute to the company's performance growth. The company's second-line 600T/D glass production line in Tengzhou was successfully upgraded to the TCO glass project on September 8. After the project was put into operation, the main products were TCO glass. At the same time, it can also provide products such as online LOW-E coated energy-saving glass, other coated glass, and original glass. The products are mainly positioned in the upstream photovoltaic field and energy saving fields. After the project is put into operation, the company's product structure will be further improved, the industrial layout will be optimized, and the company's overall competitiveness will be enhanced.

Investment advice: In the context of the Baojiao Building, completion is expected to be maintained, and demand for float glass is expected to continue.

Soda ash may show an oversupply trend in the future due to the investment of additional production capacity. The upgraded TCO glass production line is expected to contribute new business growth to the company. The company's revenue for 2023-2025 is estimated to be 75.39, 82.84 and 9.01 billion yuan, respectively, and net profit of 6.69, 7.66 and 845 million yuan respectively, corresponding to PE 14.64, 12.80 and 11.60 times, respectively.

First coverage, giving a “buy” rating.

Risk warning: Real estate completion falls short of expectations, concentrated soda ash production capacity, etc.