Core view: why do we pay attention to the photovoltaic glass industry—— Possible performance elastic varieties. Fully traded industry in the market β After that, look for varieties with real performance flexibility and considerable valuation matching.
Different from the photovoltaic glass sector in which the market is not optimistic about the profit pressure period, our view is that the cost curve of the photovoltaic glass industry is steep, leading enterprises can achieve a higher market share by accelerating the production capacity layout, and the future growth of volume will drive the continuous growth of enterprise profits.
The core conclusion is: from the perspective of total amount, it is expected that the supply of photovoltaic glass will be surplus in 2022. Even if only the first tier enterprises expand their production, the effective supply in 22 years will reach 47000 tons / day, which can support the demand of more than 250gw. However, we believe that there will be a structural shortage of wide plate glass. Assuming that wide glass accounts for 80% of the whole year, if only the first line expands production on schedule, the demand for wide glass is about 25052t / D, while the supply side is only about 20534t / D, and the gap is 4500t / d. If the first and second lines expand production as scheduled, there may be a tight balance when the proportion of wide glass is high in the second half of the year.
Industry attribute - long production cycle, capital consumption for expansion, typical growth industry
(1) Periodicity: due to the high initial investment of photovoltaic glass (1 billion yuan / kiloton kiln, about 230 million yuan / GW), the return cycle is long (8 years, 6.9 years higher than the adhesive film and 4.1 years for the inverter), and it takes 3 months to stop the kiln and return to work. Generally, enterprises produce continuously, so the industry has periodicity.
(2) Growth: in addition to the basic growth rate of new PV installed capacity (20-30% annualized), the increase of double glass permeability (2% and 30% in 2017 and 2020, respectively, which can be increased to 80% in the long term +) also increases the demand for PV glass, making it have growth beyond the PV industry.
Judgment of supply and demand - structural and quarterly shortage, driving performance elasticity
In terms of total demand, the demand for photovoltaic glass is mainly brought by the growth of photovoltaic installation + the improvement of double glass permeability. Assuming that the permeability of double glass modules reaches 50 / 70% in 22 years, the corresponding glass demand is 11.48/11.98 million tons (1.9/2.2 billion square meters). In terms of supply, the price and energy consumption audit of glass (energy consumption level of new capacity audit, the level of energy consumption before construction capacity starts), the requirements of hearing (the necessity of project construction, the advanced technology, etc.), and the fact that no enterprise has finished the process, and other factors, there is uncertainty in the expansion of the sub enterprises, if only the first line enterprises expand their production on schedule. The corresponding effective capacity is 17.06 million tons. If the first and second lines can expand production as scheduled, the corresponding new effective capacity is 20.21 million tons, and the overall capacity is probably excess.
In terms of structure, the demand for wide plate glass increases with the increase of the proportion of large-size components. Assuming that the permeability of large-size components is 70 / 90% in 22 years, the demand for wide plate glass is 8 / 10.29 million tons. Due to the high cost of producing 182-210 components in old capacity kilns, new kilns generally meet this demand. However, under the background of increasing energy consumption and carbon emission requirements, the production capacity of second and third tier enterprises may be less than expected on a large scale. At the same time, due to cost pressure, some small kilns will accelerate the exit, resulting in a possible shortage of wide plate glass, lasting for more than half a year. Assuming that wide glass accounts for 80% of the whole year, if only the first line expands production on schedule, the demand for wide glass is about 25052t / D, while the supply side is only about 20534t / D, and the gap is 4500t / D; If the first and second lines expand production as scheduled, there may be a tight balance when the proportion of wide glass is high in the second half of the year.
Competition pattern - duopoly, excellent competition pattern
At present, the total share of Xinyi and Flat Glass Group Co.Ltd(601865) nominal capacity has reached 53%, which has formed a duopoly pattern. In the future, we believe that the leading enterprises will continue to improve the market share, but at the same time, the second tier enterprises will squeeze the share of the third and fourth tier enterprises. The reason is that the glass products are seriously homogeneous. In the future, the main competition depends on the cost and scale advantages, and the leading enterprises will compete with the second The gross profit margin difference of the third tier enterprises is about 8 PCT and 18 PCT respectively. The first and second tier enterprises will mainly expand their production in the future.
Cost:
(1) Composition: manufacturing expenses (natural gas, electricity, etc.) account for 53%, and direct materials (soda ash, quartz sand, etc.) account for 43%; The cost gap among enterprises mainly comes from the unit consumption and purchase price of Materials & energy, which reflects the gap between the average single line scale of kilns, process technology and supply chain management.
(2) Influencing factors: when the scale of single line kiln is expanded by 100t / D, the gross profit margin can be increased by about 1PCT. The kiln of first-line enterprises is larger, and the gross profit margin is 4 and 6pct higher than that of second and third lines respectively; First tier enterprises have the advantage of process know-how, which can increase the gross profit margin by about 3 and 12 PCT respectively compared with the second and third tier enterprises; The preferential purchase price of self-produced upstream materials quartz sand (13% of the cost) and soda ash & natural gas (17% and 24% of the cost respectively) can increase the gross profit margin by about 1PCT.
(3) Impact Sustainability: the scale of kilns is continuously increasing. Although the short-term gap is narrowed, long-term leading enterprises can take the lead in using larger kilns than the second tier; The process know-how of each enterprise is constantly improving, the short-term front-line enterprises still have great advantages, and the long-term gross profit margin gap will be narrowed; The scale of quartz sand resource leader continues to be larger than that of the second tier, and the advantage of gross profit margin brought by material purchase price can also be maintained.
Price outlook:
It is estimated that the industry probability in 22-23 years is the period of oversupply, and the glass pricing will be strongly related to the cost curve. Recently, the price of photovoltaic glass has declined, and the price of 3.2mm glass has decreased from 30 yuan / m2 in October to 26 yuan / m2. The main reasons are as follows: 1. In terms of cost, the high price of soda ash has fallen, and the marginal cost of the industry has fallen. 2. In terms of demand, the previous high prices in the industrial chain restrained demand, and glass enterprises were facing inventory pressure. Looking forward to next year, on the cost side, Flat Glass Group Co.Ltd(601865) represents all the production capacity costs of first-line enterprises, Luoyang Glass Company Limited(600876) represents the second line and Henan Ancai Hi-Tech Co.Ltd(600207) represents the third line. Assuming that the fuel price remains stable, the average price of soda ash in 22 years is 2600-3100 yuan / ton. It is estimated that the full cost of 3.2mm glass including tax for second tier enterprises in 22 years is 26.9-28.4 yuan / m2. On the supply and demand side, the 22-year effective capacity of the first, second and third tier enterprises is 10.59, 6.39 and 6.34 million tons respectively, and the glass demand corresponding to the installed capacity of 220gw is 14.85 million tons. Considering the shutdown or replacement of old capacity and the failure of some enterprises to meet the expected production expansion progress, we judge that the price of photovoltaic glass in 2022 will be near the full cost line of the second and third tier manufacturers. Therefore, we expect the price center of 3.2mm glass in 22 years to be 26.9-28.4 yuan / m2. It is expected that the net interest rate of leading enterprises in 22-23 years may be maintained at about 20%.
Investment suggestion: in the short term, the profitability of leading enterprises in the period of price pressure is stronger than that of the second and third tier, which is expected to take the opportunity to increase their share and stabilize the competition pattern; In the long run, leading enterprises have obvious advantages in cost control compared with the second and third tier, and are most expected to obtain industry growth dividends. It is recommended to focus on [ Flat Glass Group Co.Ltd(601865) ] (jointly covered with the building materials group), [Xinyi solar energy] (jointly covered with the building materials group).
Risk warning: the downstream demand is less than expected, and the production expansion of second and third tier enterprises is more than expected; The calculation is subjective and only for reference.
