Incident: The company's 2024Q1 revenue was 581 million yuan, down 3.67% year on year; attributable net profit was 51 million yuan, down 37.56% year on year; net profit after deduction was 45 million yuan, down 37.83% year on year.
Q1 Glass fiber prices continued to weaken, and the company's revenue performance was under pressure. In terms of price, according to Zhuochuang data, the average price of 2024Q1 alkali-free glass fiber thick yarn was 3,677 yuan/ton, a year-on-year decrease of 21.82%. On the demand side, exports of glass fiber and its products in the first quarter were 525,500 tons, up 12.40% year on year. While domestic production capacity increased year-on-year due to price increases and downstream inventory replenishment, inventories fell from 842,600 tons at the beginning of the year to 794 million tons.
Prices fell sharply year on year in the first quarter. Although the demand side recovered at the end of the quarter, overall company revenue performance was under pressure. Revenue and net profit fell 3.67% and 37.56% year on year, respectively.
Prices affected profits, and Q1 profit margins declined under pressure. 2024Q1's gross margin was 21.55%, down 6.24pct; the net margin was 8.72%, down 4.75pct. The decline in profit margin was mainly due to the fact that glass fiber prices remained weak in the first quarter, putting pressure on product profits. Looking specifically at the cost side, the 2024Q1 company's cost rate during the period was 12.87%, a decrease of 0.68 pct. Among them, the sales expense ratio was 2.38%, the same increase of 0.71 pct, the management expense ratio (including R&D) was 9.79%, the same decrease of 0.23 pct, the financial cost ratio was 0.70%, and the same decrease was 1.15 pct.
Stock replenishment price increases have been implemented steadily, and attention is being paid to the improvement in downstream demand in the second quarter. Previously, the price of glass fiber products continued to drop, and downstream processing and manufacturing companies basically maintained minimum inventory in order to reduce inventory losses. Currently, with leading companies driving up prices, downstream stocks have begun to be replenished, and prices are gradually being transmitted downward. At the same time, leading companies have changed their external strategies. Although the supply and demand pattern has not changed significantly since then, short-term prices are still supported by costs. Looking at the second quarter, the issuance of special bonds is expected to accelerate physical workload and support economic growth. At the same time, the GDP growth rate is expected to remain at 5% this year, and the ratio of industry demand growth to GDP is about 1.5-2. Coupled with the volume of emerging fields such as photovoltaic aluminum frames, demand is resilient.
Investment advice: We expect the company to achieve net profit of 367/5.27/721 million yuan in 2024-2026, respectively, with a year-on-year change of 23.8%/43.7%/36.8%. The latest closing price corresponds to PE of 12.0x/8.4x/6.1x, maintaining the “increase” rating.
Risk warning: Wind power installations fall short of expectations; risk of exchange rate fluctuations; industry declines beyond expectations.