\u3000\u3000 Shandong Fiberglass Group Co.Ltd(605006) (605006)
Event: on January 12 Shandong Fiberglass Group Co.Ltd(605006) , the company issued an announcement of performance pre increase. The company expects to achieve an operating revenue of RMB 2.529 billion to RMB 2.969 billion in 2021, a year-on-year increase of 26.70% to 48.73%, with a median value of RMB 2.749 billion, an increase of 37.72%. The net profit attributable to the parent company was 509 million yuan to 597 million yuan, a year-on-year increase of 195.11% to 246.43%, with a median value of 553 million yuan, an increase of 221.51%. In the fourth quarter alone, the net profit attributable to the parent company was 59 million yuan to 147 million yuan, a year-on-year increase of – 26% to + 84%. The median value was 103 million yuan, a year-on-year increase of + 29%.
Revenue side: the median revenue in the fourth quarter was 691 million yuan, an increase of + 9.7% and + 13.1% month on month. Benefiting from the continuation of the industry boom, the revenue continued the year-on-year growth trend, and the production, sales and average price increased slightly month on month. Sales volume: the sales volume of 21q4 glass fiber is expected to be about 100000 tons, flat year-on-year and increased month on month. This is mainly due to the successful technical transformation of line 3 to 100000 t / A, and the ignition of the kiln on October 22. It is expected that the production and sales volume will increase in December. Ton price: the average ex factory price of glass fiber of 21q4 company is 6267 yuan, with a year-on-year increase of + 18% and a month on month increase of + 4% (the same month on month data are taken from Zhuo Chuang information).
On the profit side, the median net profit attributable to the parent company in the fourth quarter was 103 million yuan, a year-on-year increase of + 29%, maintaining double-digit growth for the sixth consecutive quarter. The median net interest rate was 14.9%, year-on-year + 2.2pct, month on month -4.6pct. We expect the company’s glass fiber production cost to be basically stable in the fourth quarter, and the net profit per ton is flat compared with 21q3. The thermal power business of the subsidiary may be affected by the high coal price, and the profit margin is limited. It is expected that the high coal price will decline rapidly since October, and the profit level has been improved.
Glass fiber industry: the pressure release period of 21q4 production capacity has passed, and the energy consumption double control boosts the weakening of the industry cycle. From the perspective of the quarterly marginal new effective capacity of roving, only 21q4 has more marginal new effective capacity, reaching 58000 tons / quarter. After entering 22 years, the marginal new effective capacity has slowed down. We expect the marginal new effective capacity of Q1-Q4 in 22 years to be 1.7/1.7/3.3/13000 tons / quarter respectively. Under the “dual control of energy consumption”, it is more difficult to increase the new capacity of the industry, and the landing uncertainty increases. Under the judgment that the demand side continues to improve, the industry boom is expected to continue.
The company’s advantages such as capacity scale, low cost and customer resources highlight its comprehensive strength.
1) the production capacity is the fourth largest in China and continues to expand through cold repair technical transformation: according to the announcement of the company, the company plans to carry out cold repair technical transformation on a glass fiber tank furnace wire drawing production line with an annual output of 60000 tons of Tianju energy saving, a wholly-owned subsidiary. After the technical transformation is completed, the production capacity of the production line will be increased to 170000 tons. In the follow-up, there are still plans for cold repair and technical transformation of production lines. It is expected that China’s production capacity will reach about 620000 tons by 2025.
2) low cost advantage: the company has obvious comprehensive advantages such as large-scale, intelligent and self owned thermal power, and the unit cost shows a downward trend. With the rapid progress of the construction of digital production base in Yishui plant, the company’s key indicators such as man hour efficiency and energy consumption intensity will be in line with the first-class level in the industry. There is still room for cost reduction due to the expansion of production capacity and the promotion of cold repair technology.
3) customer resource advantages: OC is the company’s largest customer, and OC will also give the company certain technical (wetting agent) and management support.
4) employee stock ownership advantage: the company’s middle-level and above management and technical personnel hold shares on the company’s stock ownership platform, the management team is stable, and shows development determination and confidence.
Investment suggestion: the core recommendation logic is the cold repair and technical transformation of beta superposition companies in the glass fiber industry, which brings a rise in volume, price and profit, maintains a high profit state and makes the valuation more cost-effective. Due to the company’s 21-year performance forecast, we predict that the company will realize a net profit attributable to the parent company of 580 million yuan and 670 million yuan (the previous value of 610 million yuan and 680 million yuan) from 2021 to 2022, and the corresponding PE of the current stock price is 12 and 11 times respectively. Maintain the “buy” rating.
Risk warning: macro demand is less than expected; Supply increased more than expected; Risk of delay in the construction of new production lines; The public data used in the research report may have the risk of information lag or untimely update.
