The company announced its full year results for 23, with 23fy's revenue of HK$26.6 billion, yoy +29.6%; net profit to mother of HK$4.19 billion, yoy +9.6%. Of this, 23h2 earned HK$14.49 billion, yoy +33.6%, hoh +19.3%; net profit to mother was HK$2,796 billion, yoy +46%, and hoh +101%.
Performance growth was affected by the price of photovoltaic glass, and h2 profitability rebounded significantly from a revenue perspective. ① 23fy photovoltaic glass business revenue was HK$235 billion, yoy +33%. By weight, the 23fy sales volume of solar glass is +49.3%, which is basically in line with the pace of increase in production capacity (effective annual melting volume yoy +45.9%). Specifically, 23fy added 6 new 1,000t/d production lines, of which H2 invested 4 new 1,000t/d production lines, and the daily melting capacity reached 2.58 wt/d by the end of '23. On the other hand, the price of 23h2 photovoltaic glass fell month-on-month (according to Zhuochuang information, the average price of 23h2 single flat 3.2mm coated photovoltaic glass was 25.9 yuan, yoy -5%/-1.4 yuan, hoh -1.6%/-0.4 yuan), which was the main reason why the revenue growth rate was weaker than the sales growth rate.
② The solar power business generated 23fy revenue of HK$2.97 billion, yoy +8%. The increase in revenue from the solar power generation business was generally stable. 23fy added 1,094 MW of grid-connected photovoltaic power plants, a record high. By the end of 23fy, the company had approved a total of 5944MW of grid-connected photovoltaic power plant projects (of which 5541 MW were centralized power plants). At the same time, the company plans to add a 300MW self-built solar farm project in '24.
From a profitability perspective, the company's 23fy comprehensive gross profit margin and net profit margin were 26.6%, 15.7%, and YOY was -3.4 and -2.9pct, respectively; of these, 23h2 comprehensive gross profit margin and net profit margin to mother were 30.5% and 19%, respectively; YOY was +4.2 and +1.6pct, respectively; and HOH was +8.5 and +7.8pct, respectively. By business, the gross margins of 23fy solar glass and solar power generation were 21.4% and 68.5%, respectively; the gross margins of the 23h2 business were 26.4% and 66.6%, respectively; YOY was +1.8 and -0.8 pct, respectively, and HOH +11.2 and -3.8 pct, respectively. The gross margin of photovoltaic glass recovered significantly from month to month.
PV glass production is expanding steadily, and capital expenditure is expected to slow
The company has a stable position as the leading cost advantage in the photovoltaic glass industry and is steadily expanding production (24fy is expected to put into operation 6 new production lines totaling 6,400t/d, of which 2 are 1,200t/d production lines in Malaysia). We believe that the expansion of industry production is gradually returning to a rational context. From an enterprise perspective, future growth will mainly focus on leading photovoltaic glass companies with strong profitability, photovoltaic production lines built by float glass companies, and vertically integrated photovoltaic companies. We expect the company's photovoltaic glass market share to rise steadily, and leading advantages such as cost are expected to continue to be consolidated and strengthened.
In terms of capital expenditure, the company was HK$9.9 billion in '23 and is expected to be HK$7 billion for the full year in '24 ($5.5 billion for photovoltaic glass and power plants).
Continuing to be optimistic about the company's growth prospects and leading advantage. Maintaining the “purchase” rating combined with the PV glass boom position and raw fuel price situation, we adjusted the PV glass price and cost assumptions, and also took into account the company's new production capacity and investment in polysilicon production capacity. We lowered the company's overall revenue forecast for 24/25 to HK$344/42.4 billion (previous value of HK$392/51.7 billion), added a 26-year forecast to HK$50.1 billion, and lowered the company's 24/25 net profit forecast to HK$4.63/59 billion (previous value 78104) HKD 100 million), The additional 26-year forecast was HK$7.25 billion, and the 24-26 net profit YoY was 10.6%/27.4%/22.9%, respectively. Maintain a “buy” rating based on the company's leading position and growth prospects.
Risk warning: the relationship between PV glass supply and demand is weaker than expected, policy risk, PV power plant repayment risk, polysilicon investment implementation pace and return lower than expected risk