Guojin Securities released a research report stating that it maintained the “buy” rating of Xinyi Solar (00968), adjusted the 2024-2025 net profit forecast to 49.47 (-18%), 62.59 (-19%), and added the 2026 net profit forecast of HK$7.614 billion based on the current judgment on the photovoltaic glass industry and the company's latest plans. On February 28, the company disclosed its 2023 annual report. In 2023, it achieved revenue of HK$26.63 billion, up 29.6% year on year, and realized net profit of HK$4.19 billion, up 9.6% year on year, slightly exceeding expectations.
The main views of Guojin Securities are as follows:
The cost of photovoltaic glass fell, prices improved, and profitability recovered significantly in the second half of the year.
In 2023, the company added a 6*1000t/d photovoltaic glass production line. At the end of 2023, production capacity reached 25,800 t/d, an increase of 30.3%, which led to a 49.3% increase in PV glass sales. The sales price of photovoltaic glass rose in the second half of the year, and the cost of core raw materials such as soda ash decreased, and the company's product structure was optimized, and the profitability of photovoltaic glass was significantly restored. In the second half of the year, the gross margin of photovoltaic glass increased 11.2 PCT to 26.4% month-on-month, and the gross profit margin for the whole year was 21.4%.
Actively expand production to consolidate the leading edge, and shipments and share are expected to continue to increase.
In 2024, the company plans to add 6 additional production lines with a total of 6,400 t/d kilns (Wuhu 4*1000t/d, Malaysia 2*1200t/d), which are expected to be ignited one after another in the first half of 2024. The cold repair production line is expected to fire in Q3. The production capacity is expected to increase to 32,200 t/d by the end of the year. The effective annual melting volume is expected to increase by 35.2% to 10.6 million tons in 2024. Low module prices in 2024 are expected to drive a continued high increase in PV demand. Superimposed terrestrial power plants and N-type TopCon emissions will increase the share of double glass, and demand for photovoltaic glass is expected to maintain a high growth rate in 2024. In 2023, in the context of profit pressure, risk warning mechanisms, and tight financing, the expansion of production showed signs of slowing down. Currently, this trend is expected to continue in 2024. In particular, most of the second- and third-tier photovoltaic glass companies are currently in a state where production expansion capacity and momentum are insufficient. The company is expected to achieve a shipping growth rate faster than the industry's growth rate in 2024, driving up market share and continuing to consolidate its leading position.
Prices in the industrial chain have bottomed out, driving power plant development to accelerate, and polysilicon is expected to contribute to output in the second half of the year.
Module prices fell rapidly in 2023, and the company took the opportunity to increase the grid-connected scale of photovoltaic power plants. More than 1 GW was added to the grid throughout the year, an increase of 22%, driving the same increase in power plant revenue by 8%. On February 28, the company signed a 790MW power plant transfer agreement with Xinyi Energy, and the company's development and sale business model progressed smoothly. In addition, the company's 60,000-ton polysilicon project in Qujing, Yunnan is expected to be put into operation in the first half of 2024 and contribute to output in the second half of 2024.
Risk warning: PV glass supply and demand deteriorate; power plant scale growth falls short of expectations; power plant subsidy verification.