On February 28, the company disclosed its 2023 annual report. In 2023, it achieved revenue of HK$26.63 billion, up 29.6% year on year; realized net profit to mother of HK$4.19 billion, up 9.6% year on year, slightly exceeding expectations.
The cost of photovoltaic glass fell, prices improved, and profitability recovered significantly in the second half of the year.
In 2023, the company added a 6*1000t/d photovoltaic glass production line. At the end of 2023, production capacity reached 25,800 t/d, an increase of 30.3%, which led to a 49.3% increase in PV glass sales. The sales price of photovoltaic glass rose in the second half of the year, and the cost of core raw materials such as soda ash decreased, and the company's product structure was optimized, and the profitability of photovoltaic glass was significantly restored. In the second half of the year, the gross margin of photovoltaic glass increased by 11.2 PCT to 26.4% month-on-month, and the gross profit margin for the whole year was 21.4%.
Actively expand production to consolidate the leading edge, and shipments and share are expected to continue to increase. In 2024, the company plans to add 6 additional production lines with a total of 6,400 t/d kilns (Wuhu 4*1000t/d, Malaysia 2*1200t/d). The cold repair production line is expected to ignite 2*1000t/d in Q3, and production capacity is expected to increase to 32,200 t/d by the end of the year. The effective annual melting volume is expected to increase by 35.2% to 10.6 million tons in 2024. Low module prices in 2024 are expected to drive a continued increase in PV demand. Superimposed terrestrial power plants and N-type TopCon emissions will increase the share of double glass, and demand for photovoltaic glass is expected to maintain a high growth rate in 2024. In 2023, in the context of profit pressure, risk warning mechanisms, and tight financing, the expansion of production showed signs of slowing down. Currently, this trend is expected to continue in 2024, especially for second- and third-tier photovoltaic glass companies. Currently, most of them have insufficient capacity and momentum to expand production. The company is expected to achieve a shipping growth rate faster than the industry's growth rate in 2024, driving up market share and continuing to consolidate its leading position.
Prices in the industrial chain have bottomed out, driving power plant development to accelerate, and polysilicon is expected to contribute to output in the second half of the year. Module prices fell rapidly in 2023, and the company took the opportunity to increase the scale of PV power plants connected to the grid. More than 1 GW was added to the grid throughout the year, an increase of 22%, driving the same increase in power plant revenue by 8%. On February 28, the company signed a 790MW power plant transfer agreement with Xinyi Energy, and the company's development and sale business model progressed smoothly. In addition, the company's 60,000-ton polysilicon project in Qujing, Yunnan is expected to be put into operation in the first half of 2024 and contribute to output in the second half of 2024.
Based on our current judgment on the photovoltaic glass industry and the company's latest plans, the company's 2024-2025 net profit forecast was adjusted to 49.47 (-18%), 62.59 (-19%), and the 2026 net profit forecast was added to HK$7.614 billion. The current stock price corresponding to PE is 7/5/4 times, maintaining the purchase rating.
Risk warning
PV glass supply and demand deteriorated; power plant scale growth fell short of expectations; power plant subsidy verification.