I. Development
of the Glass Industry in 2022 In 2022, China is facing multiple pressures such as repeated epidemics, sluggish consumption and real estate thunderstorms, and the downward pressure on the economy is increasing. Since the second half of 2021, the real estate market has intensified its efforts to deleverage and control risks, narrowed financing channels, continuously declined the sales area of commercial housing, and the cumulative investment in real estate development has shown negative growth year on year. Although the state has put forward progressive policies to stabilize the real estate market, such as stabilizing the real estate market and guaranteeing the delivery of buildings, the weakening of terminal demand and the shortage of funds of real estate enterprises have led to the construction and repair situation falling short of expectations. As a result, the growth of demand for flat glass was restrained. In 2022, the output of flat glass in China was 1,012.785 million weight boxes, representing a year-on-year decrease of 3.7%, of which the decline was mainly due to the output
of float glass. At the beginning of the year, the price performance of float glass was still acceptable. Since March, the epidemic has been breaking out all over the country, the downstream demand has fallen sharply, and the real estate capital has not been improved, which further aggravated the slowdown of glass deep processing orders. At the same time, the supply of glass production capacity remains high, inventory continues to accumulate, and glass prices continue to decline. At the same time, due to the impact of geopolitical conflicts and global inflation, the prices of raw materials and fuels for glass such as natural gas and soda ash have risen sharply, the profitability of the industry has declined sharply, and the industry has fallen into a loss state. Despite the increasing number of cold repairs of float glass and the gradual decline in supply in the second half of the year, the price trend of glass is still weak and the industry continues to lose money. The overall supply and demand situation of photovoltaic glass market remained roughly balanced, but with the sharp rise in production costs and limited increase in product prices, the gross interest rate of most enterprises declined, while the net interest rate declined year on year. As the demand for photovoltaic installation continues to increase and the future market prospects are promising, the photovoltaic glass industry has become the most eye-catching track in the glass industry. A number of existing and new industry players have been actively expanding capacity. Despite the rapid growth of industry demand, the supply of photovoltaic glass also increased significantly in 2022, the tight supply of photovoltaic glass eased, and the price of products remained at a low level during the year.
In this context, the performance of listed companies in the glass industry has also been greatly affected, especially those with float and architectural glass as their main industries. According to the main business, the current listed companies in the glass industry are mainly divided into two types: float glass manufacturers (including deep processing) and photovoltaic glass manufacturers. The operating income of most float glass listed companies has declined or the growth rate has slowed down, while the net profit of most companies has declined sharply, and only a few companies have achieved counter-trend growth due to other business hedging. The strong growth of the PV industry has driven the growth of the demand for PV glass, and the operating income of most PV glass enterprises has increased year-on-year. However, due to the substantial increase in the production capacity of PV glass and the decrease in the average selling price, the net profit of most PV glass has declined significantly year-on-year. Glass enterprises take the way of transformation to save themselves, some invest in the expansion of photovoltaic glass production wave, some transform photovoltaic, timely transformation can effectively hedge the impact of the downward cycle of real estate building glass.
Float glass manufacturers: Fuyao Glass and a few other enterprises grew
against the trend, and the overall operation of major listed float glass companies was mixed. Due to the decline of flat glass production, the decline of price center and the rising cost of raw materials and fuels for glass production, the operating income of most companies declined or the growth rate slowed down, while the net profit of most enterprises declined sharply. However, a few enterprises have achieved counter-trend growth.
From the perspective of business scale, there are two listed glass companies with revenue of more than 20 billion yuan, namely Xinyi Glass (HK $25.746 billion) and Fuyao Glass (HK $280. Xinyi Glass's revenue and profit both declined, mainly due to the decline in the average selling price of float glass and the rise in production costs such as soda ash and energy. Although the sales of float glass, automobile glass and architectural glass all increased, it could not save the declining performance. Due to the recovery after the epidemic and the increase in overseas sales of automotive glass, the revenue and profit of Fuyao Glass have increased significantly, mainly due to the substantial increase in revenue due to product optimization, the proportion of high value-added products has increased, and the sales of both automotive glass and float glass have increased. Nanbo Group and Qibin Group followed closely, with revenue exceeding 10 billion yuan in 2022, 15.199 billion yuan and 133 yuan respectively. In terms of net profit, Xinyi Glass and Fuyao Glass were equally divided, reaping HK $51.27 and HK $47
respectively. Fuyao Glass, Nanbo Group, Jinjing Technology, Yaopi Glass and Jingang Photovoltaic (formerly known as Jingang Glass) increased their revenue year-on-year. Among them, CSG and Jingang Photovoltaic have timely transformed and adjusted their industrial structure. CSG has entered the photovoltaic glass and polysilicon industries. Jingang Photovoltaic has transformed and invested in photovoltaic cell business. Jinjing Technology has also achieved growth in photovoltaic glass, soda ash and other businesses. The development of new businesses has effectively hedged the impact of the decline in traditional float glass business. Yaopi Glass is still mainly engaged in float glass, but the overall revenue is still growing due to new production capacity and the growth of automotive processing glass revenue, which offsets the decline of building glass revenue. Net profit of most enterprises has declined sharply compared with the same period last year, mainly due to the impact of rising costs.
Table 1: Operating Results of Major Float Glass Listed Companies (2022, 100 million yuan)
(1) Xinyi Solar Energy: a photovoltaic glass manufacturing enterprise under Xinyi Glass, a leading float glass enterprise, was listed on December 12, 2013, and is currently the leading photovoltaic glass enterprise in China. Driven by the growth in market demand and the commissioning of new production lines, the sales volume of photovoltaic glass of Xinyi Solar increased significantly by 44.6% in 2022, and the operating revenue also increased by 27% year-on-year. During the year, Xinyi Solar added six new solar glass production lines with a daily melting capacity of 1,000 tons each, and by 2022, the total melting capacity of solar glass of Xinyi Solar reached 19,800 tons per day. Two more production lines will start trial production in March 2023, and the capacity target for 2023 is to add seven new solar glass production lines with a total daily melting capacity of 7,000 tons, thus increasing the total daily melting capacity of solar glass to 26,800 tons by the end of 2023. However, due to the impact of falling prices and rising costs of photovoltaic glass, net profit did not increase but decreased.
(2) Flat: As of December 31, 2022, the total production capacity of Flat is 19,400 tons/day. The fourth phase project of Anhui production base has been in the process of construction, and it is planned to start production in 2023 according to the construction progress. This was mainly due to the release of new production capacity and the increase in demand in the photovoltaic industry, mainly due to the increase in sales volume and the significant increase in the cost of raw materials and energy. Although the operating revenue increased significantly by 77.44% year-on-year, the net profit only increased slightly by 0.
(3) Triumph New Energy (Luoyang Glass): During the reporting period, the photovoltaic glass production line of Tongcheng New Energy Project with a daily melting capacity of 1200 tons was ignited and put into operation, and the production capacity scale was further expanded. The projects under construction are progressing in an orderly manner. The first phase of Luoyang New Energy Project, two production lines of 1200 tons/day solar photovoltaic cell packaging material substrate and supporting deep processing production lines have commenced construction during the year. The Yixing New Energy Project is progressing smoothly and is expected to be put into operation in the first half of 2023. By the end of 2022, the production capacity of photovoltaic glass sheets produced by Triumph Xinneng was 4,650 tons per day, representing a year-on-year increase of 116. The total sales volume of photovoltaic glass for the year exceeded 200 million square meters, representing a year-on-year increase of more than 80%. In February this year, the company's name was officially changed from "Luoyang Glass Co., Ltd." To "Triumph New Energy Co., Ltd.", demonstrating the company's determination to transform to the direction of new energy.
(4) Ancai Hi-Tech: during the year, Ancai Photovoltaic New Materials operated a 900t/d photovoltaic glass production line, with a designed annual output of about 39 million square meters of photovoltaic glass deep processing products; The photovoltaic glass project with an annual output of 48 million square meters in Xuchang Ancai was successfully ignited. The photovoltaic glass project with an annual output of 180,000 tons in Jiaozuo Ancai was successfully ignited on April 24, and the production capacity of photovoltaic glass in production increased by two times compared with the same period last year. In addition to photovoltaic glass, the downstream demand for LNG and float glass is weak in the main business of Ancai Hi-Tech. Photovoltaic glass sales hit a new high. The PV glass business achieved a sales revenue of RMB2.010 billion for the year, representing a year-on-year increase of 52. The production and sales volume of float glass also increased to a certain extent, but the increase in cost was higher, and the gross profit margin decreased significantly. Overall, in 2022, although the revenue of Ancai Hi-Tech increased by 23% compared with the same period last year, the net profit attributable to the parent company dropped sharply 63.
(5) Amadon: The previous year, due to the failure to release production capacity, coupled with the decline in the price of photovoltaic glass, the performance declined sharply in 2021. In 2022, on the premise of stable supply of original glass in Fengyang Silicon Valley and continuous improvement of deep processing capacity efficiency of Anhui Branch, the company's production and sales of photovoltaic glass increased significantly compared with the same period last year, which had a positive impact on the company's operating performance, thus achieving a counter-trend growth this year. Revenue and net profit attributable to parent company increased by 55.92% and 54% respectively.
(6) IRICO New Energy: The overall PV glass business maintained a rapid development trend.The first kiln of Shangrao Base was successfully ignited on December 30, 2022, and the remaining kilns and deep processing production lines were accelerated. The three deep processing production lines of Xianyang Base Phase I reached full production capacity and began to supply steadily. The shipment volume of PV glass for the whole year increased by approximately 51% year-on-year, and the proportion of new products also increased significantly. However, the decline in the price of PV glass, coupled with the impact of the rising cost of raw materials such as soda ash and quartz sand, led to a 19.64% year-on-year increase in its revenue, but the net profit attributable to the parent company decreased by 45.
During the reporting period, the operating revenue of the Company increased steadily and the net profit decreased compared with previous years, mainly due to the following reasons: firstly, the gross profit of modules decreased compared with the same period last year due to the impact of rising prices of silicon materials and bulk commodities; Second, the company's PV glass shipments increased year-on-year. During the reporting period, the company's PV glass business revenue was 412.0193 million yuan, an increase of 8.
https://img7.ccement.com/richtext/img/yvdlmtlbye1683857187021. With the demand for glass picking up, the downstream is actively stocking up, and the price of glass has been rising since March. The advantage of cost is that the price of soda ash has begun to fall, the price of energy has fallen more than same period last year, and the profit of glass will be greatly released.
At present, the contradiction between supply and demand in the photovoltaic industry is mainly reflected in the fact that the growth of demand can not catch up with the growth of supply. According to the agency's forecast, the current global production of photovoltaic glass has been able to meet the annual installed capacity of about 400 GW, while the global installed capacity of photovoltaic in 2023 is expected to be around 350 GW. In addition, there are a large number of photovoltaic glass projects under construction and proposed. In 2023, the supply-demand relationship of photovoltaic glass is still loose, and it is expected that the market will continue to fluctuate around the cost, with a slight decline compared with 2022.
In 2023, the operating performance of both float glass production enterprises and photovoltaic glass production enterprises will increase compared with 2022.
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