Incident: The company announced its 2023 annual report. The company achieved revenue, net profit attributable to mother and net profit of $19.65 billion during the reporting period, respectively, +0.29%, -37.77%, and -10.73% year-on-year after retroactive adjustment. In 2023Q4, it achieved revenue, net profit to mother, and net profit after deduction of 76.58, 5.16, and 466 million, respectively. After retroactive adjustments, compared with -4.34%, -54.27%, and -16.39%, respectively. 63.29% and +86.40% (month-on-month without retroactive adjustments).
Incident: The company announced its 2024 quarterly report. During the reporting period, revenue, net profit attributable to mother, and net profit without return to mother were 44.3, 2.16, and 108 million, respectively. After retroactive adjustments, the year-on-year ratio was -12.16%, -47.66%, and -76.82%, respectively, and -42.15%, -58.14%, and -76.82% month-on-month, respectively (no retroactive adjustments were made).
In 2023, the fiberglass industry is booming, and sector profits are under pressure. Demand growth in all major glass fiber segments was under pressure in 2023, and there was an overall imbalance between supply and demand in the industry. On the price side, as production lines such as 200,000 tons of thick yarn in China's Jushi Jiujiang and Taishan Glass Fiber Zoucheng 6 to 12 thick yarn were ignited in the first half of the year, their production capacity climbed down significantly and had a significant incremental impact on the market in the second half of the year. Industry prices declined significantly month-on-month in Q3 and continued to hit record lows. Looking at the company's production and sales in 2023, the sales volume of glass fiber and products was 1.36 million tons, and the sales revenue of glass fiber and products was 8.377 billion yuan, -8.3% year-on-year. We estimate that the average tonne price, ton cost, and net profit of the company's glass fiber and products were 6172.89, 4776.69, and 749.18 yuan/ton, respectively, -21.61%, -10.25%, and -69.07%, respectively.
Currently, the bottom of the glass fiber industry is clear. Coarse yarn is starting to recharge prices, and the price elasticity of electronic yarn is high. In terms of thick yarn, we estimate that the new effective production capacity for thick yarn will be 40.6 and 648,000 tons in 2024-2025, corresponding supply growth rates of 4.5% and 6.8%, respectively. We estimate that the downstream demand growth rates for thick yarn will be 4.4% and 4.7% respectively in 2024-2025. Currently at the bottom of the cycle, production capacity at the end of the cycle is still losing money to cash costs. The pace of commissioning additional production capacity may slow down, cold repair production lines have increased, and the overall supply side is manageable. The supply side is generally manageable, and supply and demand in the glass fiber industry is expected to improve in 2024. Looking at 2024Q1, demand in the main downstream sectors of glass fiber has recovered. Among them, thermoplastics, electronics, and wind power related fields are growing better, while overseas market demand is stronger than domestic demand. From January to January 2024, the export volume of glass fiber and products was 525,500 tons, +12.07% over the same period last year. On March 25, 2024, when the recovery in domestic demand was compounded by recovery in external demand, there was a restorative price increase at the industry level, and inventories were rapidly eliminated. By the end of April, the inventory of glass fiber manufacturers was -24.4% month-on-month. In terms of e-yarn, we added -1.6 and 112,000 tons of effective production capacity in 2024-2025, corresponding to supply growth rates of -1% and 7.3% respectively, and production capacity contracted in 2024. We expect e-yarn demand to be +7.8% year-on-year in 2024. The rapid increase in demand combined with a contraction in production capacity. The price of electronic yarn continues to increase. The price of electronic yarn continues to rise.
Taibo will increase in volume in 2024, and the bottom has a strong competitive advantage. Taishan is the second-largest glass fiber thick yarn company in the world. By the end of 2023, the production capacity was over 1.3 million tons. Glass fiber products accounted for a high share of revenue, leading the industry in terms of profit by ton. Currently, the company plans to build 300,000 tons of coarse yarn production capacity at the Taiyuan base and the Zoucheng 5 to 8 fine yarn project. Among them, the first phase of the Shanxi base is expected to be put into operation in 2024 Q3, the second phase of 150,000 tons is expected to be put into operation in 2025H1, the Zoucheng 5 to 8 project is expected to be put into operation in 2024H1, and the company's design capacity is expected to increase by 180,000 tons in 2024.
In 2023, the restructuring of Sinoma Blade and Zhongfu Lianzhong was completed, and the profit level of the wind power blade sector improved dramatically. In 2023, Zhongcai Blade completed the acquisition of 100% of China's shares. Combined with the strong recovery of wind power installations in 2023, China Material Vane+Zhongfu Lianzhong showed a “1+1＞2” integration effect. After considering the merger of Zhongfu Lianzhong, the company sold 21.6 GW of wind power blades throughout the year, +4.96% compared to the same period, and a single set of power reached 5.6 MW/set, with a net profit of 586 million yuan over the same period.
2023 The cost of lithium battery diaphragms has dropped sharply, and profit resilience is strong. The company's lithium battery diaphragm business achieved revenue of 2,437 billion yuan in 2023, +30.56% year-on-year, and achieved sales volume of 1,733 billion square meters, or +52.9% year-on-year. We estimate that the unit price, unit cost, and net profit of the company's lithium film were 1.41, 0.86, and 0.43 yuan/square meter, respectively, compared to -14.61%, -12.27%, and +0.96%, respectively. Against the backdrop of price pressure, lithium battery diaphragm profits showed strong resilience, which was mainly a sharp decline in unit cost. The company continued to promote lean management and cost reduction and efficiency on the lithium battery separator production side. In 2023, the utilization rate of base film production capacity reached 107%, and the yield rate of production line A remained stable above 90% throughout the year. Reduced procurement costs and refinement As a result of the three-pronged approach of improving efficiency and improving efficiency, the unit cost of the substrate film was reduced by 24%.
The expansion of lithium battery diaphragm production capacity continues to advance, and the market share and profit scale are expected to further increase. By the end of 2023, the company already has a base film production capacity of 4 billion square meters. Subsequent production capacity is expected to exceed 6 billion square meters in 2024. Currently, the company's lithium battery diaphragm products and customer structure are constantly being optimized, and the cost side continues to decline. We believe that the company can increase its market share while maintaining relative profit resilience and boost the contribution of the lithium battery diaphragm business to the company's overall profit.
The forward-looking layout of in-vehicle hydrogen storage tanks took the lead in the market. In 2023, the company shipped 13,000 in-vehicle hydrogen storage bottles, +70% compared to the same period last year. The revenue scale exceeded 200 million yuan, and the market share remained leading in the industry. The company has forward-looking layout of automotive hydrogen storage tank segments, and production capacity construction, product layout and technology research and development are continuously advancing. The Suzhou base has built an intelligent 70Mpa four-bottle production line (production capacity of 5,000 units), and new products such as 320L and above large-volume three-type hydrogen storage bottles, 70Mpa four-type bottles, 30Mpa hydrogen storage tube containers, and 99Mpa stations have also been developed. The company has a comprehensive product, production capacity and technical layout, waiting for the fuel cell vehicle market to mature and start.
Profit forecast and investment advice: The company's profit in 2023 is under pressure. We lowered our profit forecast and introduced the 2026 profit forecast. We expect the company's 2024-2026 net profit to be 25.06/29.98/3.415 billion, respectively (2024-2025 prior values were 26.74/3.32 billion, respectively), and the 2024-2026 PE corresponding to the current stock price is 10.4/8.7/7.6X, respectively. Considering that the current stock price fully reflects pessimistic market expectations, the company's PB valuation department maintains a historically low level of “buy” “Enter” rating.
Risk warning: Demand for glass fiber has declined sharply, new supply is too high, and the price of raw glass fiber yarn has dropped sharply; wind power installed capacity has fallen sharply; lithium battery diaphragm business falls short of expectations; fuel cell vehicle market development falls short of expectations; risk of untimely information updates; risk of policy implementation falling short of expectations.