\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 865 Flat Glass Group Co.Ltd(601865) )
Key investment points
Events: 1) from 2022 to 2023, the company invested 6 billion yuan in Nantong to build 6 photovoltaic glass production capacity with a daily melting capacity of 1200 tons; 2) The acquisition of 100% equity of fengsha group Dahua mining and Sanli mining has completed the industrial and commercial change registration, with a total transaction price of 3.34 billion yuan.
Accelerate the expansion of production capacity and strengthen the leading position: the company plans to invest 6 billion yuan in Nantong from 2022 to 2023 to build six photovoltaic glass production capacity with a daily melting capacity of 1200 tons, which will be completed in two phases. Four 1200 tons in phase I will be completed and put into operation before the end of 2023. By the end of 2021, the company will have a production capacity of 12200 tons / day (including 600 tons / day in Jiaxing under cold repair). In 2022q1, the company will put into operation two 1200 tons / day kilns in Jiaxing, Zhejiang Province, and five 1200 tons / day kilns in Fengyang, Anhui Province in 2022q2-q4. In 2023, it is planned to continue to put into operation eight 1200 tons / day kilns. We expect the company’s production capacity to reach 20600 / 30200 tons / day in 2022 / 2023, an increase of 69% / 47%.
Strong demand + rising natural gas prices, and the rise in glass prices is transmitted to the downstream. In 2021q4, the price of 3.2mm/2.0mm glass dropped to 25 / 19.2 yuan / m2 due to no obvious rush loading of China’s ground power stations. At the beginning of March 2022, the price of glass began to rise by 1-2 yuan. The reasons are as follows: 1) China’s distributed and overseas rush loading demand supermarket is expected, and the industry demand is strong; 2) With the change of international relations in 2022q1, the price of natural gas in China rises, and the price rise of glass transmits cost pressure to the downstream.
Purchase quartz placer at a low price to improve the proportion of self supply and cost control ability: the company purchased 150626 million tons of Dahua mining and 288023 million tons of quartz placer of Sanli mining at the price of 76 yuan / ton, and has completed the industrial and commercial change registration. 1) The quality and price of quartz sand is one of the core elements of glass competition. The company’s acquisition of quartz sand can improve the self-sufficiency rate and supply capacity; 2) After cleaning and processing, the self supply cost of quartz sand is 100120 yuan / ton, which is significantly lower than the market price. We calculate that the self supply part can save 2 yuan / m2, and the leading position will be further strengthened.
Profit forecast and investment rating: Based on the fluctuation of glass price in 2021 and recent large capital expenditure, we lowered the profit forecast for 20212023. We expect the net profit attributable to the parent company to be RMB 2.20/30.1/4.01 billion in 20212023 (the previous value was RMB 2.39/33.5/4.07 billion), a year-on-year increase of + 35.0% / + 37.1% / + 33.0%, corresponding to EPS of RMB 1.02/1.40/1.87 in 20212023, maintaining the “buy” rating.
Risk tip: the policy is less than expected, the market competition intensifies, and the asset acquisition is less than expected.
