Core views

The company released its 2024 quarterly report. During the reporting period, the company's revenue was 5.726 billion yuan, and net profit to mother was 760 million yuan. Q1 The company's sales increased month-on-month, and the decline in gross profit margin and net profit margin was better than expected. Considering the current tight balance in the monthly supply of photovoltaic glass and the number of days the industry has remained low in inventory, the price of photovoltaic glass is expected to remain high in Q2. In 2024, the company planned 8 1200t/d production capacity, making it the photovoltaic glass company that added the most production capacity during the year. In addition, the company's 1600t/d kilns are expected to be launched one after another in 2025-2026, and the cost will once again widen the gap with second-tier manufacturers.

occurrences

The company released its 2024 quarterly report. During the reporting period, the company's revenue was 5.726 billion yuan, up 6.73% year on year, up 1.54% month on month; net profit to mother was 760 million yuan, up 48.57% year on year, down 3.95% month on month.

Brief review

Q1 The company's sales increased month-on-month, and the decline in gross profit margin and net profit margin was better than expected.

In terms of net profit, Q1's comprehensive gross margin fell 1.9 pct month-on-month, mainly because the decline in the price of Q1 photovoltaic glass was greater than the decline in cost: (1) price side: the number of days in PV glass inventory remained high in January-February. Although the decline began in March, the average price of Q1 photovoltaic glass declined sequentially; (2) cost side: Q1 is still the heating season, and natural gas costs remain high. However, the Q1 company's comprehensive net interest rate decreased by only 0.8 pct month-on-month, mainly due to a month-on-month decrease in company expenses and an increase in shipment volume during the reporting period, which diluted the cost ratio.

In terms of shipment volume, we expect Q1's shipments to increase month-on-month, mainly due to the month-on-month decline in the price of Q1 photovoltaic glass, but the company's revenue increased 1.5% month-on-month.

With no significant change in the production capacity of the company's photovoltaic glass, shipments still achieved month-on-month growth, mainly due to the fact that some photovoltaic glass shipped in Q4 was actually received in Q1.

Considering the current tight balance in the monthly supply of photovoltaic glass and the number of days the industry has remained low in inventory, the price of photovoltaic glass is expected to remain high in Q2.

Supply side: Refer to Zhuochuang News data. As of the end of March, the production capacity of photovoltaic glass was about 104,000 t/d. According to 6.4 GW/1000 t/d, the corresponding photovoltaic glass production capacity was about 55.5 GW/month;

Demand side: Referring to PVInfoLink data, the PV module production schedule for March has reached 60.6 GW;

Inventory days: Referring to Zhuochuang information data, the number of PV glass inventory days in the last week of April was 18.56 days, which is still in a low position.

The company's production capacity is expanding rapidly, and it is the photovoltaic glass company that added the most production capacity during the year. By the end of 2023, the company's production capacity is about 20600 t/d. In 2024, the company plans to add the production capacity of Anhui Phase 4 4*1200t/d+ Nantong Phase 1. Among them, the Anhui Phase 4 Section 1 1200t/d kilns have already been ignited at the end of March, the remaining 3 are expected to be ignited one after another in Q2, and the Nantong Phase 1 production capacity is expected to reach 30200t/d by the end of the year after delivery.

The company's 1600t/d kiln is about to be launched. The cost of photovoltaic glass is expected to once again widen the gap between second-tier manufacturers, and the profit center of the industry is expected to move upward. The company has planned 1,600t/d kilns at domestic bases in Yibin, Beihai, and overseas Indonesia and Vietnam, which are expected to be implemented one after another in 2025-2026. After the 1,600t/d kiln is launched, it is expected that the cost of the company's photovoltaic glass will drop further. At the same time, a large number of kiloton kilogram kilns under construction in the industry will lose their operating value, and control of the industry will gradually return to Xinyi and Follett.

Investment advice: In the short term, the current production capacity of photovoltaic glass is already in a tight balance between supply and demand, and prices are expected to rise after the peak demand season; in the long run, after the Xinyi, Follett 1450, and 1600t/d kilns are put into operation, the industry will bid farewell to the kiloton kiln era, control over the industry's production pace will return to the industry leader, and the profit center of photovoltaic glass is expected to shift upward, and the company will concentrate on benefiting. The company's net profit for 2024-2026 is expected to be 38.41, 44.85, and 5.43 billion yuan respectively, with year-on-year growth rates of 39.19%, 16.76%, and 21.06%, respectively. Earnings per share are 1.63, 1.91, and 2.31 yuan, respectively. PE corresponding to the closing market value on April 30 is 16.3, 13.96, and 11.53 times, respectively.

Risk warning: 1. Competition in the industry is intensifying. According to statistics from the Ministry of Industry and Information Technology participating in the photovoltaic glass hearing in various provinces across the country, there is currently a large domestic photovoltaic glass production capacity under construction and to be built. If planned production capacity is concentrated at a certain point in time, there may be a risk of a price war in the short-term glass sector; 2. The cost of raw materials will rise. The main raw materials of photovoltaic glass include soda ash, quartz sand, and natural gas. If the prices of the above products rise rapidly, the gross margin of photovoltaic glass may shrink; 3. Demand in the photovoltaic industry falls short of expectations. We forecast the company's shipments based on demand in the PV industry maintaining a 20%-30% growth rate in the next few years. If demand in the PV industry falls short of expectations, the company's glass shipments may also fall below our forecast value.