24Q1 revenue/net profit to mother was +0.8% /- 0.2 billion yuan, maintaining the “purchase” 24Q1 company's revenue/net profit of 14.4/-0.1 billion yuan, or +0.8% /- 0.2 billion yuan over the same period. The decline in photovoltaic glass prices led to a decline in the company's profitability, but the increase in sales led to continued revenue growth. We maintain the company's 24-26 EPS forecast of 0.71/0.95/1.32 yuan, 24-26 CAGR +29.2%. Comparatively, the 24-year average PEG value for A/H shares was 0.62/0.41x (24-26 CAGR was +26.7%, respectively). We are optimistic about the company's cost reduction space and the expansion of the optoelectronic glass category, but considering the pressure on the company's short-term profitability, A-shares were given 0.72xPEG in 24, with a target price of $14.94; considering the Hong Kong stock market's liquidity discounts and paying more attention to short-term performance, the H shares were given 0.31xPEG in 24, and the target price of HK$6.99 was maintained.
Revenue continues to grow due to the release of production capacity, and the decline in prices has put pressure on gross margins. According to Zhuochuang Information, the average price of 3.2/2.0mm coated photovoltaic glass in 24Q1 was 25.7/16.6 yuan/square meter, -1.3%/-12.1% YoY, and -4.5%/-10.3% month-on-month. The price of photovoltaic glass declined year-on-year, but the company's revenue increased 0.8% year on year. We believe the company's new production capacity released an increase in sales volume. 24Q1's gross profit margin was 8.2%, -1.7 pct year on year, mainly due to a drop in the price of photovoltaic glass.
The cost ratio remained stable during the period, and the net operating cash flow improved by 8.2%, compared to -0.1 pct year-on-year. Among them, sales/management/R&D/finance expenses were 0.4%/2.6%/3.8%/1.4%, respectively, and -0.2/+0.1/-0.3/+0.2pct year-on-year, and the overall expense ratio remained stable. In 24Q1, the company's net profit margin was -0.4%, -1.3 pct year-on-year, mainly due to a decline in gross margin.
The 24Q1 net operating cash flow of the company was -70 million yuan, +130 million yuan year-on-year, mainly due to a year-on-year increase in cash inflows such as matured payment of notes and discounts on higher credit rating notes.
The construction of new production capacity is progressing steadily, and the cold repair technology of old production lines has improved production efficiency. According to the company's annual report, by the end of 23, the company's photovoltaic glass production capacity was 5,270 t/d, an increase of 13% over the previous year. According to the company's official account, by the end of March '24, 60% of the overall construction schedule of the Northern Glass Project had been completed. It is planned to install part of the equipment in April, and the full installation and commissioning of the equipment will be carried out in June. The orderly progress of construction of new projects is expected to help the company continue to expand its production capacity. Meanwhile, the company's old production lines in Yixing and Tongcheng began cold repair technology in early '24, and production efficiency is expected to improve further after the technical reform is completed.
Risk warning: PV installed demand is lower than expected, production capacity investment integration is slow, and profit growth falls short of expectations.