Incident: Recently, the company announced its 2023 annual report and 2024 quarterly report. The company's revenue in 2023 was 15.7 billion yuan, +17.8% year over year; net profit to mother was 1.75 billion yuan, +33.0% year over year; net profit after deducting non-return to mother was 1.66 billion yuan, +39.4% year over year. 24Q1: The company's revenue was 3.86 billion yuan, +23.2% year on year; net profit to mother was 400 million yuan, +292.3% year over year.

Comment:

Float profits have remained good, and the photovoltaic business has grown significantly.

Float glass: The company has 24 strips of float glass totaling 16,600 t/d, accounting for about 10% of the country. The overall relocation production line in Shaoxing was completed and ignited in 2023. The original 2 production lines of 600 tons/day were discontinued. The overall production capacity was stable. The sales volume during the year was 110 million heavy boxes, +5.6% year over year, average price 79.5 yuan/box, year-on-year - 1.1 yuan, gross profit of 21.6 yuan/box, the company's median gross profit from 2008 to 2023 was 20.2 yuan/box, 2023 Gross profit is close to that level.

Photovoltaic glass: The company added 6000t/d production capacity to 8,200t/d in 2023. Benefiting from this, the company sold 194 million square meters of photovoltaic glass in 2023, +201.7% year-on-year. The cost reduction was greater than the price drop. The gross profit was 3.8 yuan/square meter, +1.8 yuan/square meter year on year. In 2023, the subsidiary Hunan Kibing Solar achieved net profit of 240 million yuan.

Further increase the photovoltaic glass business and implement follow-up investment by employees and actual controllers. The company previously announced 1200t/d in Chenzhou, Hunan (already put into operation in April 2022), 1200t/d project in Shaoxing, Zhejiang, China (2 in production in 2023), Fujian Zhangzhou 2*1200t/d photovoltaic glass project (already put into operation in 2023), announced in March 2022 the Malaysian investment 2*1200t/d (1 already put into operation), announced the construction of the third line in Malaysia, 1200t/d in April 2022, and Zhaotong, Yunnan in April 2022 The 1200t/d project, totaling 18,000t/d photovoltaic rolled glass projects, there are 3 projects under construction in 2024.

If the above project is implemented, in the future, the daily melting capacity of the company's photovoltaic rolling will exceed the current daily melting volume of float glass (16600 t/d), and photovoltaic glass is expected to become another pillar industry, opening up new growth space. In November 2023, the board of directors agreed to agree that the employee investment platform set up by the company and employees of the Kibin Solar Energy project management team will transfer 15.5030% of the company's shares in Kibing Solar Energy, and at the same time, Ninghai Kibin Keyuan, controlled by the actual controller Mr. Yu Qibing, to transfer 13.7490% of the shares of Kibin Solar Energy held by the company.

Maintain an “better than the market” rating. We expect the company's 2024-2026 EPS to be 0.85, 0.92, and 1.03 yuan/share, respectively, giving 2024 to 14 times PE, with a reasonable value range of 11.90 to 13.60 yuan/share.

Risk warning. 1) The industry's resumption of production capacity exceeded expectations; 2) raw material costs exceeded expectations; 3) The progress of deep processing fell short of expectations.