The company released its 2024 quarterly report. 2024Q1 revenue was 1.44 billion yuan, yoy +1%; net profit to mother was -0.1 billion yuan, an average loss year-on-month; net profit after deducting non-return to mother was -0.1 billion yuan, an average loss year-on-month.

The 24q1 profit level is under pressure, and the scale of photovoltaic glass production capacity continues to grow rapidly. Under the combined influence of the discontinuation of glass production lines in the North in June 2023 and the high increase in photovoltaic glass sales, 2024Q1's revenue remained stable year on year. 2024Q1's gross margin was 8.2%, yoy-1.7pct, and -3.6pct month-on-month; net profit margin was -0.4%, yoy-1.3pct, and -11.0pct month-on-month. Profitability pressure is expected mainly due to pressure on PV glass prices and the company's new line in a climbing period. According to Zhuochuang information, the average factory price of 2024Q1 3.2mm/2mm photovoltaic coated glass was 25.6/16.4 yuan/square meter, respectively, yoy -2%/-13%, respectively, and -4%/-9% month-on-month, respectively. By the end of 2023, the company's photovoltaic glass production capacity was 5,270 tons/day, +620 tons/ +13% year over year; according to Zhuochuang information, the production capacity of new photovoltaic glass is expected to be 7,200 tons/day from 2024-2025.

Pay attention to the company's prospects for transforming new energy materials platforms

2024/3/29 Beifang Glass plans to sell cold end and annealing kiln equipment for two float glass production lines to Bengbu Kaisheng, with a transaction amount of about 6.66 million yuan; the desulfurization and denitrification equipment for the production line will be sold to Shenzhen Kaisheng, with a transaction amount of about 39.22 million yuan. The company is speeding up the divestment of the architectural glass business, focusing on the main photovoltaic glass business. With the gradual implementation of production capacity under construction, the scale advantage is expected to gradually become apparent, and the company's photovoltaic glass business is expected to enter a new growth cycle.

The PV glass business has good prospects for improving profit levels. We expect the company's 2024-2026 revenue to be 87/115/145 billion yuan, respectively, Yoy 32%/32%/27%, net profit to mother, 5/6/700 million yuan, YOY 29%/27%/16%, EPS of 0.79/1.00/1.15 yuan/share, respectively, and a 3-year CAGR of 21%. In recent years, the company has been in a period of strategic transformation. Information shows that the glass and architectural glass business is gradually being divested, and 2024Q1's performance is under phased pressure. The company focuses on the main photovoltaic glass industry. With the gradual implementation of production capacity under construction, the scale advantage is expected to gradually become apparent. The company's performance may begin a new cycle of growth. Referring to comparable company valuations, we gave the company 18 times PE in 2024, with a target price of 14.18 yuan, giving it a “buy” rating.

Risk warning: The commissioning progress of photovoltaic glass production lines falls short of expectations; risk of rising raw material prices; risk of PV installations falling short of expectations.