Serious killing, the expected difference is huge, and the violent rebound at any time, the photovoltaic glass industry is in the end!

This is the 807th original article of the New Energy Big Bang

This year, the photovoltaic industry has entered a stage of overcapacity has become the consensus of the market, and it has been really reflected in the third quarterly report of many industry companies, and has become an established fact, but in this case, there is a link that is completely unaffected, and even rises against the trend, but the market does not reflect this unexpected performance at all, which is the photovoltaic glass link.

01

Photovoltaic glass made a lot of money in the third quarter

In the third quarter of 2023, Follett achieved revenue of 6.2 billion yuan, up 59% year-on-year and 44% quarter-on-quarter, and net profit attributable to the parent company was 884 million yuan, up 76% year-on-year and 54% quarter-on-quarter, setting a record for net profit in a single quarter. The consolidated gross profit margin was 24.5%, an increase of 4.6% from the previous quarter.

Not only the performance of the industry leaders is good, but the third quarterly reports of the industry's second- and third-tier enterprises are generally excellent.

For example, the float glass faucet, in recent years, Kibing Group, which has fiercely entered the photovoltaic glass industry, achieved revenue of 4.3 billion yuan in Q3, an increase of 28.48% year-on-year and 14.53% month-on-month, a net profit attributable to the parent company of 596 million, a year-on-year increase of 251.89% and a month-on-month increase of 11.52%, and a gross profit margin of 27.7%, a year-on-year increase of 11.45 percentage points and a month-on-month increase of 1 percentage point.

For example, CSG A's revenue in the third quarter was 5.091 billion yuan, an increase of 18.81% year-on-year and 17.87% month-on-month, and the net profit attributable to the parent company was 577 million yuan, a year-on-year decrease of 11.11%, a month-on-month increase of 17.06%, and a gross profit margin of 23.06%, both year-on-year and quarter-on-quarter.

In addition, Kaisheng Xinneng's Q3 revenue was 1.952 billion, a year-on-year increase of 92.08%, and the net profit attributable to the parent company was 69 million, a year-on-year increase of 427.74%, with a gross profit margin of 12.72%. Almaden's Q3 revenue was 1.004 billion, a year-on-year increase of 23.09%, and the net profit attributable to the parent company was 44 million, a year-on-year increase of 170.56%, with a gross profit margin of 8.81%.

Compared with most of the photovoltaic links, the performance of photovoltaic glass companies is undoubtedly very bright, and it can even be said to be a bit incredible, and it seems that it is completely unaffected by short-term overcapacity in the photovoltaic industry.

The answer lies in the fact that the production capacity of the photovoltaic glass industry has been limited by regulators, which is equivalent to a passive reform of the supply side of production capacity.

02

"Passive supply-side reform"

At the beginning of 2020, the Ministry of Industry and Information Technology included photovoltaic glass in the management of relevant capacity replacement policies. The production capacity of the entire flat glass industry is limited to the existing range, and the new production capacity must be conditional on the withdrawal of production capacity, and if the photovoltaic glass factory wants to increase the production line, it must take the production capacity of the flat glass industry to withdraw from the market as an indicator.

Affected by this policy, from mid-September 2020, the price of photovoltaic glass has risen sharply due to the short supply of products.

With the domestic commitment to carbon peaking and carbon neutrality, the development needs of the photovoltaic industry and the actual situation of tight glass production capacity are considered. In July 2021, the Ministry of Industry and Information Technology (MIIT) implemented a differentiated policy for PV glass capacity replacement:

1. New industrial flat glass projects and photovoltaic rolled glass projects with a melting kiln capacity of no more than 150 tons/day do not need to formulate capacity replacement plans.

2. New photovoltaic glass projects no longer require capacity replacement, but must establish an early warning mechanism for capacity risks.

Although the new photovoltaic glass project no longer requires capacity replacement, but to establish a capacity risk early warning mechanism, the new project by the provincial industry and information technology department entrusted by the national industry organization or intermediary agencies to hold a hearing, demonstrate the necessity of project construction, technological advancement, energy consumption level, environmental protection level, etc., and announce the project information, after the project is completed and put into operation, the enterprise fulfills its commitment not to produce architectural glass.

Compared with other links in the photovoltaic industry chain, the capacity risk early warning mechanism is equivalent to the fact that the initiative of photovoltaic glass capacity expansion is not in the hands of enterprises, or it still affects the capacity expansion of the industry to a considerable extent.

In addition to the different progress of capacity expansion, the characteristics of photovoltaic glass production and manufacturing are also very different from those of other industries.

Other links in the photovoltaic industry, such as cell and module production lines, can be flexibly scheduled according to market demand, but the start and stop of photovoltaic glass is very troublesome and the cost is very high.

Therefore, after the ignition of the photovoltaic glass production line, it generally has to run for more than 5 years, and it is basically 5 to 8 years after cold repair, which generally takes 3 to 4 months, and the cost is at least tens of millions or even hundreds of millions, which leads to the production of the photovoltaic glass industry is completely rigid, even if the industry has overcapacity and entered a state of loss, it must also insist on production.

It is precisely for this reason that the commodity attributes of photovoltaic glass are stronger than other links, and the industry presents a very obvious cyclicality, and the expansion and construction cycle generally takes about one and a half to 2 years, and there is a relatively large time lag between the supply and demand of the industry.

In May this year, the Ministry of Industry and Information Technology and the National Development and Reform Commission issued the "Notice on Further Improving the Risk Early Warning of Photovoltaic Rolled Glass Production Capacity", which further limited the progress of production capacity.

On the one hand, the expansion of relatively moderate production capacity, on the other hand, the rapid growth of downstream demand brought about by the large price reduction of photovoltaic upstream, photovoltaic glass has initially entered a state of tight balance between supply and demand, just in the case of photovoltaic glass upstream soda ash prices from the end of July, the product price has been sluggish for more than a year The industry collective price increase, to the downstream successfully transmitted the cost of soda ash to rise, because the price of natural gas is still at a low level, the performance of the photovoltaic glass industry in the third quarter is generally good.

But why does the market not give feedback on the trend of the third quarter performance of the photovoltaic glass industry at all? This is the embarrassment of the current photovoltaic industry.

03

Embarrassing PV industry

The demand for photovoltaics continues to improve, but the rapid expansion of production capacity is also an indisputable fact, from the third quarter report, in addition to the photovoltaic glass such a passive subject to capacity expansion of the link, most of the links of overcapacity are presented in the performance.

The market is still skeptical about when the overcapacity pattern in the industry will be reversed.

Originally, according to the past experience of the industry, the fourth quarter entered the peak installation season and the peak period of photovoltaic project grid connection, and the demand of the photovoltaic industry chain is expected to increase, but this year, it is generally in a state of destocking at home and abroad, even in Q4, it is mainly destocked, and the new demand is not much, which can be verified from the 14% decline in module production scheduling in November compared with October.

In the case of the relatively sluggish capital market, it is difficult for the market to have too much interest in the photovoltaic industry in the short term, and it is difficult for the sector to get out of the sustainable market, which is basically a one-day trip.

Specific to the photovoltaic glass industry, although the inventory pressure of the photovoltaic glass industry is smaller, but subject to the overall destocking pressure of the photovoltaic industry, the new demand is limited, the upward pressure on soda ash prices can be alleviated in Q4 is unknown, in addition, with the entry of the winter heating season, natural gas prices will inevitably increase, coupled with the low temperature in winter, to maintain the same furnace temperature, more natural gas is needed, and the cost will also increase.

In the case of sluggish downstream demand, it is difficult to transmit cost pressure to the downstream through price increases, and the photovoltaic glass industry is likely to have to bear the price pressure on its own, further weakening profitability.

It is precisely because of these concerns that the market did not react to the explosive results in the third quarter, and is worried about the results in the fourth quarter.

But it is precisely because of this characteristic of the market that there is a gap in expectations in the photovoltaic glass industry, once the downstream demand has increased, the photovoltaic glass is likely to be the first to respond, which is worth paying close attention to.

Statement: The article only records the author's thoughts, does not constitute investment advice, investment has huge risks, need to be cautious and cautious, I hope you treat your investment like decorating a house, don't let the time to pick a company is not as much as the time you pick furniture, you can repeatedly weigh small money, how to treat big money is so sloppy?