Follett (601865) 2019 Interim Report Comment: Capacity Release Helps Growth and Volume and Price Rise in Second Half

Follett (601865) 2019 Interim Report Comment: Capacity Release Helps Growth and Volume and Price Rise in Second Half
Brief evaluation of performance The company released its 2019 Interim Report and achieved revenue of 20.350,000 yuan (ten years +39.1%), net profit 2.6.1 billion (+22.8%), deducting non-net profit 2.3.6 billion (+16.3%), in line with market expectations. Operational analysis Efficient new production capacity released hedging 深圳桑拿网 product prices and realized high performance growth.According to our statistics, although the price of photovoltaic glass has steadily rebounded since October 2018, the average price without tax for 2019H1 products can still replace nearly 10%.The company reached two 1,000-ton daily melting production lines that were put into operation in June 2018 and April 2019, achieving sales growth and a significant reduction in unit production costs, and the gross profit margin of photovoltaic glass was only 0.5pct, an increase of 1 from the previous quarter.1pct, effectively hedging the impact of falling prices. Photovoltaic glass will usher in both volume and price in the second half of the year, and performance growth will continue to increase.Based on the fact that no new furnaces are put into operation after September this year,都市夜网 the domestic market has started to drive demand and climbed month by month, and the current status of glass enterprise inventory has continued to be low.Probability event, amplitude expected 1?2 yuan / square meter.According to the calculation of the industry’s overall expansion pace and demand, we expect that glass supply and demand will remain tightly balanced in 2020, and prices are expected to remain relatively high.By the second half of 2019, two 300-ton daily-melt production lines for cold repair production and two 1,000-ton daily-melt production lines in Haiphong, Vietnam will be put into production in 2020. Product sales volume and price will rise to promote the company’s performance growth.In addition, the company received government subsidies of 61.73 million yuan in June 2019. Only 25.25 million yuan was recognized in 2019H1. The remaining 36.48 million yuan in bonus income will be further enhanced after the recognition in the second half of the year. Under the trend of double-sided and double-glass, the growth of demand for photovoltaic glass has accelerated, and the expansion of production has achieved market share.In the first half of the year, some leading component companies have wholesaled double-glass components. In the recent centralized bidding of Guodian Investment Group, the proportion of double-glass components has reached 30%. At the same time, the United States exempted double-sided components from 201 tariffs in June.The company’s convertible bond fundraising investment project in Anhui Fengyang, two 1200-ton daily melting capacity production lines, is expected to be commissioned in 2021, which will help the company seize the opportunity of high growth of photovoltaic glass demand in the next few years, further increase market share and reduce productionCost to consolidate the duopoly position. Profit adjustment and investment recommendations maintain the company’s 2019-21E net profit forecast6.75, 10.16,12.520,000 yuan, three-year net profit compound growth rate of 43%, corresponding EPS is 0.35, 0.52, 0.64 yuan. The company’s current A-share budget corresponds to 34 / 22xPE in 2019/20, and we maintain the “Overweight” rating for A-shares; while the H-share income only corresponds to 12 / 8xPE in 2019/20, maintaining the “Buy” rating for H-shares. Risk reminder that bidding project construction progress is less than expected, grid-connected consumption situation deteriorates, and international trade environment deteriorates

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