The Zhitong Finance App learned that Zhongtai Securities released a research report saying that in 24 years, the supply and demand for photovoltaic glass is expected to improve. At the same time, considering the peak season and the time when glass production capacity rises, there may be a phased mismatch between supply and demand, leading to a rise in glass prices. According to estimates, based on March data, the tax-inclusive price of photovoltaic glass increased by 0.5-1.0 yuan/square meter, and the net profit of a single ping increased by 0.33-0.65 yuan/square meter from month to month, an increase of 16%-31%. The price was 1 yuan/square meter per square meter, and the net profit of a single flat increased by 6-7 gross per square meter. PV glass supply and demand are improved and superimposed cost optimization. The sector's profit recovery is more flexible, and leaders have fully benefited.

Related targets: It is recommended to focus on Follett (601865.SH), Xinyi Solar (00968), Kibing Group (601636.SH), Ancai Hi-Tech (600207.SH), Amarton (002623.SZ), Rainbow New Energy (00438), CSG A (000012.SZ), Kaisheng New Energy (), etc. 600876.SH

The main views of Zhongtai Securities are as follows:

Improved supply and demand are driving up the price of photovoltaic glass

From the demand side, domestic PV installations and exports performed well in January-February. In April, module production continued to rise month-on-month, with preliminary estimates reaching 58 GW. At the same time, PV glass inventories have been declining continuously for many weeks, and demand for photovoltaic glass is expected to follow the trend.

From the supply side, 1) PV glass gross margin was under pressure in the past 1-2 years, and non-leading companies were more likely to be frustrated; 2) hearing+risk warning machines limited the rapid expansion of glass production capacity. According to statistics from various provinces on the processing of early warning information on photovoltaic glass production lines, the total production capacity involved in photovoltaic glass was about 142,30t/d, of which 99650 t/d production capacity required risk warning; 3) PV glass production capacity construction required large capital support. The investment amount of a single furnace reached about 1 billion dollars, and enterprises were under heavy financial pressure. According to statistics, the production capacity of photovoltaic glass in fiscal year 23 is 9.85 wt/d, and the planned ignition production capacity is about 4 wt/d in '24. Considering the above factors limits+cold repair production capacity, the production capacity of photovoltaic glass is expected to be less than 12 wt/d by the end of '24.

Cost expectations have declined, and profitability has been further restored

Raw materials+fuel power costs account for more than 70% of the cost of photovoltaic glass. Among them, raw material costs mainly come from soda ash and quartz sand (soda ash accounts for 70% of raw materials), and fuel power costs mainly come from natural gas.

The price of soda ash has now entered a downward channel. Natural gas is expected to drop in price with the end of the heating season and the release of overseas liquefied natural gas production capacity, which will eventually lead to a decline in the cost of photovoltaic glass and further increase marginal profits.

According to estimates, based on March data, for every 5% drop in soda ash prices, net profit increases by about 0.11 yuan/square meter; for every 5% drop in natural gas prices, net profit increases by about 0.15 yuan/square meter.

In anticipation of sector profit recovery, leaders are expected to fully benefit

From a quantitative perspective, with the industry's new production growth rate limited, leading companies are expanding production in a relatively orderly manner and are expected to achieve full shipments. It is expected that Follett and Xinyi Solar will have a nominal production capacity of 30200/32200td by the end of 24. Furthermore, leading companies are implying overseas glass production capacity, which is expected to further meet customer needs and increase global share.

From a profit point of view, the lead has a clear advantage over second-tier costs. The gross margin of leading companies is about 10 points higher than other companies, and the leading edge is obvious, mainly due to: 1) Higher yield and cost savings. On the one hand, the yield is higher, with a difference of 5-6 points, which corresponds to a cost saving of 7-8 gross per square meter; 2) The scale effect reduces procurement costs. Leading companies have lower purchase prices for soda ash, corresponding to cost savings of 1 gross 3-4 gross per square meter; 3) Quartz sand resource layout effectively reduces the purchase price. The average procurement price of leading companies is 100-150 yuan/ton lower than that of second-tier companies, corresponding to cost savings of 4 gross 6-6 gross per square meter; 4) Overseas production capacity enjoys a high premium of 1-2 yuan/square meter, further improving the profit margin.

Risk warning: downstream demand falls short of expectations, large fluctuations in raw material prices, increased competition, risk of data measurement deviation, risk of reference information delivery, etc.