\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 865 Flat Glass Group Co.Ltd(601865) )
Event:
The company officially disclosed the annual report of 2021 on March 21, 2022. In 2021, the total revenue was 8.713 billion yuan, a year-on-year increase of 39.18%, the net profit attributable to the parent company was 2.12 billion yuan, a year-on-year increase of 30.15%, and the basic EPS was 0.99 yuan.
Comments:
The price rise and low point of upstream bulk commodities have passed, and the gross profit margin has ushered in an inflection point
In 2021, the company’s comprehensive gross profit margin was 35.5%, a year-on-year decrease of 11pct. Affected by the relationship between glass supply and demand and the rise in the price of upstream raw materials, the gross profit margin of Q1-Q4 decreased quarter by quarter, 58.2%, 37.4%, 31.7% and 17.9% respectively. The gross profit margin of 21q4 reached the lowest in history. 3.2mm photovoltaic glass fell to the recent low of 25 yuan / m2 in 21q4, and the prices of raw materials such as inventory and upstream soda ash rose to the recent high. Since 22q1, the price of glass has rebounded to 26 yuan / m2, and the inventory has gradually decreased. Since March, the price of soda ash began to fall. The fundamentals of photovoltaic glass have improved and ushered in a profit turning point. It is expected that the gross profit margin will rise.
Continuous expansion of production capacity and consolidation of the leading position of photovoltaic glass
The company’s photovoltaic glass kiln production capacity has increased from 6400t / D in 2020 to 12200t / D by the end of 2021, and the company plans to put in seven more photovoltaic glass production capacity of 1200t / D in 2022, and the production capacity will reach 20600t / D by the end of 2022. Due to the large-scale effect of the company’s production capacity and its technical advantages in the field of large kilns, it has realized the cost control ability of the leading industry and can expand production across the industry price cycle. The company has signed long-term sales agreements of more than 38.7 billion yuan with Longi Green Energy Technology Co.Ltd(601012) , Jingke energy, Risen Energy Co.Ltd(300118) , Ja Solar Technology Co.Ltd(002459) and other head component enterprises, with the superposition of certainty on the demand side, the continuous improvement of the supply side, and the continuous consolidation of the company’s leading position in the industry.
Benefiting from the construction volume of large base projects, both volume and price have increased
In the 2022 government work report, it is clear to promote the planning and construction of large-scale wind and solar power bases and supporting regulatory power sources. At present, the first batch of 97gw scenery base projects have been started one after another, and the second batch of 455gw scenery base project schemes have been released. During the 14th and 15th five year plans, the large base projects will become important increments. The large base project clearly encourages the use of double-sided modules, which has potential room for improvement of 25% consumption and 50% value of photovoltaic glass. In 2022, the installed capacity of China and the world is expected to increase by 50% year-on-year. The growth certainty of photovoltaic glass is very high, and the company will fully benefit as a leader.
Integrated layout to improve long-term cost control ability
On March 1, 2022, the company completed the acquisition of 100% equity of Dahua Dongfang mining and Sanli mining under Anhui fengsha group with RMB 3.34 billion. As of 2021, the holdings of quartz sand of these two ores were 16.48/32.78 million tons respectively, with a total of 49.26 million tons. We believe that the company’s layout of quartz Placer in the upstream can greatly increase the self supply proportion of quartz sand, reduce the procurement cost of quartz sand and strengthen the cost advantage of the company.
Profit forecast and investment suggestions
The company is a leading enterprise of photovoltaic glass. Due to the rise in the price of raw materials such as upstream soda ash, our expectation of net profit in 2022 and 2023 is slightly reduced. We estimate that the company’s revenue from 2022 to 2024 will be 140.5/188.2/22.93 billion yuan respectively, and the net profit attributable to the parent company will be 3.01/39.7/4.87 billion yuan respectively, corresponding to 33 / 25 / 20 times of PE. We give the company 50 times of PE in 22 years and the target price will be 70 yuan, maintaining the “buy” rating.
Risk tips
The installed capacity of photovoltaic is less than expected, the production capacity of photovoltaic glass expands too fast, and the price of upstream raw materials rises sharply
