24Q1 revenue/net profit to mother +6.7%/+48.6% YoY, maintaining “buying”
The company released its quarterly report for the year 24: Net revenue/profit to mother was 5.73/76 billion yuan in 24Q1, +6.7%/+48.6% year-on-year. Net profit to mother was in line with our expectations (750 million yuan), and the increase in photovoltaic glass sales led to a steady increase in the company's revenue. We expect the company's new production capacity to be released in an orderly manner this year, maintaining the 24-26 net profit forecast of 36/45/5.7 billion yuan. A/H shares can be compared to the company's 24-year wind consensus average of 17/14xPE. Considering that the company's production capacity is expanding rapidly this year, the scale advantage is expected to continue to show, giving the company A shares 22xPE in 24 years and a target price of 33.44 yuan for A shares; considering that the Hong Kong stock market has a relatively high discount but improved liquidity, H shares are given a target price of HK$24.78, all of which maintain a “purchase”.
Sales growth hedged price decline, 24Q1 gross margin improvement year-on-year. According to Zhuochuang information, the average price of 24Q1 domestic 3.2/2.0mm coated photovoltaic glass was 25.7/16.6 yuan/square meter, -1.3% YoY/-4.5%/-10.3%, PV glass prices declined year on month, while 24Q1's revenue was +6.7%/+1.5% month-on-month. Considering the relatively small change in the company's production capacity, we expect the company's revenue growth to be mainly due to a year-on-month increase in sales volume. The 24Q1 company's gross profit margin was 21.5%, +3.0%/-2.0% month-on-month. The year-on-year improvement was mainly due to cost reduction. According to Wind, the average domestic heavy alkali price was -18.5%/-14.4% month-on-month, and the average price of natural gas was -24.6%/-13.9% month-on-month.
The financial expense ratio declined markedly, and the net operating cash flow continued to improve the 24Q1 company's period expense ratio by 6.2%, -1.0pct. Among them, sales/management/R&D/finance expenses were 0.4%/1.2%/2.8%/1.7%, respectively, and -0.2/-0.1/-0.6 pct year on year. The financial expense ratio declined significantly or mainly due to a decrease in exchange losses and a decrease in the share of high-interest debt. The 24Q1 net profit margin of the company was 13.3%, +3.7pct year-on-year, mainly due to an increase in gross margin, a decrease in expenses, and a decrease in asset/credit impairment losses. Net operating cash flow for 24Q1 was 60 billion yuan, +1.08 billion yuan year-on-year, mainly due to an increase in cash received from sales and a decrease in cash payments for purchased products.
New production capacity is expected to be released in an orderly manner, and 24Q2 profitability is expected to increase month-on-month. According to the National Energy Administration, 24Q1 PV added 45.7 GW of new installed capacity, +35.9% over the same period last year, and downstream demand continued to grow rapidly. According to the company's annual report, the total production capacity of the company's Anhui Phase IV and Nantong projects is expected to be put into operation in '24. The first 1,200t/d was ignited at the end of March. By the end of April '24, the company's photovoltaic glass production capacity reached 21,800 t/d, and the market share continued to lead. According to Zhuochuang News and Wind, the price increase for photovoltaic glass was implemented in April, and the combined price of soda ash and natural gas continued to decline month-on-month. We expect 24Q2's profitability to increase month-on-month.
Risk warning: PV installations fell short of expectations, raw materials and energy costs rose more than expected, and industry competition intensified.