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机构：中金公司
研究员：Qing GONG/Yan MA/Yan CHEN/Maoda YANG
Kibing Group announced its 1H24 results: Revenue rose 15% YoY to Rmb7.9bn, and attributable net profit rose 25% YoY to Rmb811mn. In 2Q24, revenue grew 8% YoY to Rmb4.1bn and attributable net profit fell 31% YoY to Rmb369mn. The firm's results are largely in line with our expectations.
Trends to watch
Prices of float glass came under pressure; Kibing Group received excess profit thanks to its strong production and sales and effective cost control. In 1H24, the firm's revenue from high-quality float glass was Rmb3.7bn, with output decreasing by 1.88mn weight cases YoY to 55.03mn weight cases. Sales volume of high-quality float glass was 48.82mn weight cases in 1H24, down by 4.87mn weight cases YoY. Sales-to-output ratio of its float glass was 89% in 1H24. We estimate the firm's gross profit per box of float glass at Rmb22 in 1H24, and attribute the firm's effective cost control to: 1) Economies of scale; 2) high self-supply ratio of silica sand; 3) stable and low-cost direct gas supply. We estimate that the firm's net profit per box of float glass at about Rmb10 in 2Q24.
Production and sales volume of PV glass soared YoY; gross margin was largely the same as that of leading players. In 1H24, the firm's revenue from PV glass was Rmb2.9bn, PV glass output was 213mn sqm, and sales volume was 185mn sqm. We attribute the YoY increase in PV glass output and sales to the construction of a 1,200t/day production line in Zhaotong (Yunnan) and a 1,200t/day production line in Sabah, Malaysia. We estimate the price of the firm's PV glass was Rmb15.7/sqm in 1H24, its cost was Rmb12.4/sqm, and its gross profit was Rmb3.3/sqm. Gross margin of its PV glass business was around 21%, close to the average gross margin of industry leaders. We believe the firm has reaped benefits from economies of scale of its PV glass business and lower prices of raw materials such as fuel and silica sand. We estimate Kibing’s net profit of PV glass at about Rmb1/sqm in 2Q24.
Earnings of energy-saving architectural glass remained stable; other functional glass businesses reported losses. In 1H24, revenue from architectural glass was Rmb1.1bn, operating cost was Rmb900mn, and gross margin reached 20%. Other functional glass businesses (e.g., electronic glass and pharmaceutical glass) generated revenue of Rmb115mn and operating cost of Rmb130mn in 1H24.
Accounts receivable turnover days increased; operating cash flow under pressure; capex slightly fell YoY. The firm's accounts receivable turnover days rose 12 days YoY to 35 days, mainly due to increased sales volume of PV glass and longer payment cycles. The firm's inventory turnover days rose 4 days YoY to 75 days, mainly due to increased inventory caused by sales volume growth of PV glass as well as restocking of raw materials for new PV glass production lines. In 1H24, the firm's net operating cash flow dropped YoY to -Rmb52mn, with the revenue-to-cash- flow ratio falling 8ppt YoY to 66% and capex falling slightly YoY to Rmb2.1bn.
Financials and valuation
Due to sharper-than-expected prices of float glass, and supply-demand imbalance in the PV glass industry, we cut our 2024 and 2025 EPS by 58% and 55% to Rmb0.33 and Rmb0.34. The stock is trading at 16x 2024e and 15x 2025e P/E. Considering that the float glass and photovoltaic glass are currently at the bottom of the cycle, the company, as a leader, still has its strength, we maintain an OUTPERFORM rating, and considering both profit forecast adjustments and sector valuations, we cut our TP 40% to Rmb6.1, implying 19x 2024e and 18x 2025e P/E, offering 17% upside.
Risks
Price declines caused by falling demand from housing completions and/or imbalanced supply and demand conditions in the PV glass industry.