The Zhitong Finance App learned that Guotai Junan released a research report stating that it maintains the “gain” rating of the glass and glass products industry. Looking at the three types of glass, 1) PV glass production picked up in March, the supply margin of the industry tightened, and on the demand side. With the launch of domestic terminal power plant projects and the follow-up of overseas orders, module production picked up significantly in March. On the supply side, under full market-based competition in 21-23, the newly built production capacity of some small enterprises with poor profitability decreased. At the same time, after policies such as hearings and low risk warnings were implemented one after another, the cycle of new construction lines became longer and more difficult to put into operation. 2) Demand for intelligent upgrading of automotive glass is driving a steady increase in ASP and stable profitability. 3) Float glass profits are still high, and short-term profit certainty is high.

Key recommendations: Xinyi Glass (00868) (float glass, automotive glass), Fuyao Glass (600660.SH) (automotive glass), Kibing Group (601636.SH) (float glass, photovoltaic glass), Follett (601865.SH) (photovoltaic glass).

Guotai Junan's views are as follows:

Photovoltaic glass: Production schedule picked up in March, and industry supply was marginally tightened.

On the demand side, with the launch of domestic terminal power plant projects and follow-up of overseas orders, the module production schedule picked up significantly in March. On the supply side, under full market-based competition in 21-23, the newly built production capacity of some small enterprises with poor profitability decreased. At the same time, after policies such as hearings and low risk warnings were implemented one after another, the cycle of new construction lines became longer and more difficult to put into operation. At the company level, leading photovoltaic glass companies still maintain a gross margin of 10-15 pcts higher than the industry, and the cost curve is steep.

Automotive glass: Demand for intelligent upgrades drives a steady rise in ASP and stable profitability.

With the development of intelligent and connected automotive glass, the compatibility between automobile glass and optoelectronics enables it to continuously increase added value from the original, and the increase in the proportion of products such as panoramic canopies is driving automotive glass ASP to maintain its growth trend. At the same time, the pricing of automotive glass is relatively stable regardless of the front and rear parts market. As soda ash prices decline and the cost environment improves, stable automobile glass pricing allows cost improvements to remain on the company's profit side.

Float glass: The inventory location is reasonable, and the short-term profit certainty is high.

The profitability of 24Q1 glass is still highly certain. On the one hand, the current inventory pressure of float glass manufacturers is not high, and the storage position is about 25% lower than in the same period in '23; on the other hand, glass is still profitable for the entire industry. We expect the gross profit of leading companies to remain 25-30 yuan per box. In the later stages, under the high supply of total production capacity, the resilience of the handover reservoir to support completion determined how long the existing profits will last.

Risk warning: PV installations fell short of expectations; completion fell sharply; prices of raw materials such as energy and soda ash rose more than expected.