Key points of investment
2024Q1 achieved profit of RMB 760 million, an increase of 48.57% year over year:
In the first quarter of 2024, the company achieved operating income of 5.726 billion yuan, an increase of 6.73% year on year; net profit attributable to shareholders of listed companies of 760 million yuan, an increase of 48.57% year on year; and basic earnings per share of 0.32 yuan. Q1 Photovoltaic glass is generally stable, and its performance is good. The main benefit is that the cost of soda ash fell significantly year-on-year. The reduction in expenses during the period and the recovery of impairment losses led to a significant increase in profits.
The price of photovoltaic glass rose 0.5-1 yuan/square meter in April, and Q2 profits continued to rise:
Driven by demand for PV module construction after the holiday season, PV glass inventories dropped significantly in March, which in turn drove a slight increase of 0.5-1 yuan/square meter in April. According to data from Longzhong News, the mainstream price for 3.2mm thick glass is 26.5 yuan/㎡, and the mainstream price for 2.0mm thick glass is 18.5 yuan/㎡. The overall price of photovoltaic glass is expected to remain stable in Q2. The profit margin mainly comes from lower soda ash prices and off-season natural gas prices. It is expected that Q2 PV glass profits will continue to increase significantly year-on-year.
Actively expanding production at home and abroad to support future performance growth:
By the end of 2023, the company's total production capacity was 20,600 tons/day. In addition, the Anhui Phase IV project and the Nantong project have 8 blocks of 1,200 tons, with a total daily melting capacity of 9,600 tons/day. They are expected to be ignited and operated one after another this year, and the company's nominal production capacity is expected to reach about 30,200 tons by the end of 2024. Considering the rise in production capacity, actual production is expected to increase 20-30% year-on-year in 2024, while the additional 9,600-ton production line will contribute throughout the year in 2025. In terms of long-term production capacity, four 1,600 tons at the three domestic bases in Beihai, Sichuan, and Lianyungang in Jiangsu are undergoing a hearing process; overseas production capacity of 1,600 tons in Vietnam and 2 1,600 tons in Indonesia are expected to be ignited one after another in 2026 or later. The company's leading advantage is remarkable. Actively expanding production at home and abroad will help support continued growth in performance.
Maintain the buy rating and give a target price of HK$25.26:
We updated the company's target price of HK$25.26, which is equivalent to 14 times and 11 times PE in 2024 and 2025. The target price has room to increase 35% from the current price, and maintains the purchase rating.