Key points of investment
Incident: The company released its 2023 annual report, achieving total operating revenue of 21.524 billion yuan, an increase of 39.21% over the previous year; net profit attributable to shareholders of listed companies was 2.76 billion yuan, an increase of 30% over the previous year. The company plans to pay a cash dividend of 3.8 yuan (tax included) for every 10 shares to all shareholders, with a dividend amount of 891 million yuan, including an interim cash dividend. The company's dividend ratio for 23 years is as high as 52.57%.
Green development is deeply rooted in the hearts of the people, and the installed capacity of photovoltaics has reached a new high: many countries around the world have proposed “carbon neutrality” and “zero carbon” development goals, and vigorously developing green energy such as wind power and photovoltaics has become a global consensus. In 2023, the global PV installed capacity reached a new high of 390 GW, an increase of 70% over the previous year, and 32 markets with installed capacity exceeding 1 GW reached 32, indicating that global demand has blossomed. Among them, China's installed capacity was 216.88 GW, up 148.1% year on year, and is still the world's largest PV market; distributed 96.29 GW, up 88.4% year on year; and centralized 120.59 GW, up 232.2% year on year. According to the Photovoltaic Industry Association, the world's installed renewable energy capacity will triple to reach at least 11,000 GW by 2030. Specifically, the installed capacity of photovoltaics is expected to reach 5,457 GW, with great potential for development. Furthermore, China's photovoltaic industry chain has strong competitiveness and market share in the world, and the company, as a leading photovoltaic glass company, will benefit for a long time.
The share of double glass modules has increased, and the glass segment market is more prosperous: after recent years of development, the share of double glass modules continued to increase. According to the China Photovoltaic Association, the market share of double glass in 2023 was over 60%. Judging from the thickness of the glass, the thickness of a single glass is 3.2 mm, the thickness of the double glass is 2.0 mm, and the thickness of the two pieces of double glass is greater than that of a single glass. Therefore, with the increase in the permeability of double glass, the growth rate of demand for glass is higher than the growth rate of PV installations. Looking at the supply and demand pattern, due to rapid growth in demand and regional balance in the supply and demand pattern, the price of photovoltaic glass is at the bottom and is expected to bottom up or even rise slightly. In 2023, the company achieved sales volume of 1.21 billion square meters of photovoltaic glass, a year-on-year increase of 49.52%, inventory reduction of 29.28%, and significant storage volume.
Combining multiple factors, the industry's leading effect is remarkable: the company is the first domestic enterprise to break the international giants' monopoly on photovoltaic glass technology and market through independent research and development. It is at the leading level in the industry in terms of formulation, production process, and cost control, and has obvious scale advantages. By the end of 2023, the total production capacity was 20,600 tons/day. The total daily melting capacity of the Anhui Phase IV project and the Nantong project is expected to be ignited and operated in 24 years. At the same time, the company is located in Indonesia to meet the needs of overseas markets. After the new production capacity is released, the company's market share is expected to increase. In addition, the company has deep cooperation with many well-known photovoltaic module companies, such as Longji Green Energy, Jingao Technology, Jingke Energy, etc., so product sales are worry-free. Given the company's many advantages, the company is still able to maintain a gross profit margin of 22.45% as the price of photovoltaic glass continues to decline.
Investment advice: Green and low-carbon development is deeply rooted in the hearts of the people. As an important clean energy source, the installed capacity has increased over a long period of time.
As an important supplier to the photovoltaic industry, the company will benefit in the long term. Considering the consumption of photovoltaic glass inventories, supply and demand tend to balance, and prices are expected to stabilize or even rise slightly. We expect the company's 2024-2026 net profit to be 36.73 billion yuan, 49.77 and 6.033 billion yuan, respectively. The corresponding EPS is 1.56, 2.12 and 2.57 yuan/share, respectively, and the corresponding PE is 2.7, 2.2 and 1.9 times, respectively, maintaining the “buy-A” rating.
Risk warning: raw material and fuel power price fluctuation risk, environmental protection risk, photovoltaic industry fluctuation risk