Description of the event

In 2023, the company achieved revenue of 18.195 billion yuan, an increase of 19.7%; realized net profit of 1,656 billion yuan, a decrease of 18.73%; realized net profit without deduction of 1,536 billion yuan, a decrease of 15.59%. Among them, Q4 achieved revenue of 4.715 billion yuan, a year-on-year increase of 7.28%; net profit attributable to 188 million yuan, a decrease of 51.14%; net profit after deducting non-return to mother of 160 million yuan, a decrease of 52.82%.

2024Q1 achieved revenue of 3,947 million yuan, a year-on-year decrease of 3.03%; realized net profit of 325 million yuan, a year-on-year decrease of 17.92%; realized net profit without deduction of 295 million yuan, a year-on-year decrease of 20.02%.

Incident comments

PV & engineering glass emissions drive revenue growth. The company's annual revenue also increased 19.7%. By sector, the glass industry's revenue was 14.69 billion yuan, up 46.03% year on year (the main increase was photovoltaic glass and engineering glass, which sales volume increased 272.7% and 21.86% year on year, respectively, and float glass sales decreased 2.12%); electronic glass and display industry revenue was 1.57 billion yuan, down 4.29% year on year (electronic glass sales increased 12.14%); solar energy and other industry revenue was 2.25 billion yuan, down 42.18% year on year (sales volume of high purity crystal silicon decreased by 42.75%). In 2023, the gross profit margin was 22.3%, down 5.3 pcts. Among them, the gross profit margins of glass, electronic glass and display, solar energy and other industries were 21.88%, 16.47%, 25.77%, and 2.06, 7.72, and 9.84 pcts. The annual implementation period rate was 11.4%, and the same reduction was 0.6 pct. Of these, sales and R&D rates were reduced by 0.3 or 0.2 pcts. Asset impairment losses in the current period were 347 million yuan, an increase of 191 million over the previous year, mainly due to long-term asset impairment preparations made by Yichang CSG during the display period. In the end, the net interest rate for the whole year was 9.1%, down 4.3 pcts.

2023Q4 earnings pressure remains strong. In Q4, revenue increased by 7.3% in a single quarter; achieved gross profit margin of 20.9%, down 3.7 pcts year on year, which is expected to drag down other sectors a lot considering the recovery in float glass and photovoltaic glass; the three rates were 13.3%, up 0.6 pcts year over year, with management rates increasing by 1.2 pcts and R&D rates falling 0.7 pcts.

Other Q4 earnings were 95 million yuan, up 60 million from year on year; asset impairment was calculated in Q4, with a year-on-year loss of 190 million; credit impairment losses decreased by 39 million yuan year on year; ultimately, net vested interest rate was 4.0%, down 4.8 pcts year on year.

2024Q1 revenue has declined. Revenue fell 3.03% year on year in a single quarter; realized gross profit margin of 21.3%, down 0.9 pct year on year; the period rate was 12.5%, up 1.9 pcts year on year, of which the management rate increased 1.7 pct year on year, mainly due to increased depreciation and amortization; other income increased 18.98 million year over year due to additional VAT offsets; and credit impairment achieved revenue of 5.46 million due to impairment of special bad debts. In the end, the net vested interest rate was 8.2%, a year-on-year decrease of 1.5 pct.

The layout of the entire photovoltaic industry chain. By the end of 2023, the company had 7 photovoltaic rolled glass kilns and supporting photovoltaic glass deep processing production lines in Dongguan, Wujiang, Fengyang and Xianning. The products covered deep processing products with various thicknesses of 1.6-4 mm. The two photovoltaic glass production kilns and supporting processing lines under construction in Beihai are progressing in an orderly manner. One kiln was fired at the end of March 2024, and the second kiln is scheduled to be ignited within 2024. Furthermore, as of mid-2023, the company's Yichang production base has a production capacity of 10,000 tons/year of high-purity crystalline silicon, 2.2 GW/year of silicon wafers, and 7,200 tons/year of purified monocrystalline materials for ingots; the Dongguan production base has a production capacity of 0.6 GW/year for batteries and 0.6 GW/year for modules.

Investment suggestions: The photovoltaic business may be rapidly released and enter the first tier; engineering glass is positioned at the high-end, and production capacity is rapidly expanding; the e-glass industry is expected to recover. The expected 2024 performance is 1.74 billion, which is 10 times the corresponding PE.

Risk warning

1. Reduce expectations under the cost of photovoltaic glass;

2. Demand for completed real estate is low.