Qibin Group: The first-come float glass leader
has concentrated equity and developed steadily. Qibin Group entered the glass industry through the acquisition of Zhuzhou Glass Factory in 2005. The company was listed on the A-share motherboard in 2011 and acquired Zhejiang Glass Co., Ltd. in 2013. Over the past ten years of listing, the company has concentrated its equity and developed steadily. Through external expansion of production capacity and internal optimization of management, the company has gradually grown into an industry leader with a revenue of 10 billion yuan. The company's long-term equity is concentrated, and Mr. Yu Qibing is the largest shareholder of the company.
Deep ploughing in the south, float dragon head. The company's main products are float glass sheets. In 2020, the company's glass sheet business accounted for 87% of the main revenue. Regionally, the company's revenue mainly comes from East China and South China, accounting for 46.4% and 35% respectively. The company's main domestic float glass production bases are located in Fujian, Hunan, Zhejiang and Guangdong, all of which are located in silica sand producing areas with convenient transportation. With the advantages of location, raw materials and transportation, the benefits are better. According to Zhuochuang Information, as of January 31, 2022, the company's production capacity in Fujian, Hunan and Zhejiang provinces accounted for 51%, 73% and 74% respectively, with concentrated production capacity and high regional market share.
In 2020, the Company produced 120 million heavy boxes of raw glass sheets, accounting for 12% of the national output in the same period. As of January 31, 2022, the daily melting capacity of the Company's float glass production capacity was 17,600 tons, and the daily melting capacity of the domestic production line was 16,200 tons. It accounted for 9% of the domestic production capacity of float glass in the same period.
Optimized management and improved operation. Since its listing, the company's performance has continued to grow steadily. Mr. Yu Qibing, the controlling shareholder of the Company, stepped down as the chairman in April 2016. Since then, the Company has achieved management upgrading and performance growth through the appointment of professional managers, the absorption of external talents, the introduction of business partnership system and equity incentive measures, the continuous combing of internal management system and the reshaping of corporate culture. In 2020, the Company achieved revenue of RMB 9.64 billion, with an increase of 3.6%; net profit attributable to parent company of RMB 1.83 billion, with an increase of 35.6%; net cash flow from operating activities of RMB 3.12 billion, with steady growth of cash flow and steady increase in the proportion of revenue; gross profit rate of 37.8% and net profit rate of 18.9% both increased year-on-year; The expense ratio was 14.0%, slightly higher than same period last year, mainly due to the increase in management expenses brought about by the partnership system and equity incentive measures; the asset-liability ratio was 33.4%, slightly lower than same period last year, and the financial strength was enhanced; The dividend is 930 million yuan. Maintain a dividend payout
ratio above 50%
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Float glass: rigid supply limit, price center in 2022 or downward movement
Glass production: rigid supply, large
investment in environmental protection Glass is an inorganic non-metallic material with transparent, transparent, airtight physical properties and chemical inertness that is not easy to react with other elements. This makes it widely used in construction, automotive, electronics, medical, instrumentation and other fields.
Glass sheet is mainly produced by float process. The more mature glass forming processes include float, draw, draw up, calender, draw down, etc. The main difference lies in the different ways of glass forming. Because of low product quality, small output, large energy consumption and emission in the production process, the flat pull method and the lead pull method have been eliminated by the state. At present, glass sheet is mainly produced by float process, which can be equipped with large tank furnace with high output and low energy consumption, and tin bath is used as forming equipment. Calendering method is mainly used for the production of patterned glass. The product has wool-like patterns on one or both sides. It is opaque but has good light transmission. It is mostly used for the production of solar cell packaging materials or wire glass. The water-cooled calendering roller table is used as the forming equipment. The downdraw method is divided into overflow downdraw method and slit downdraw method, which are mainly used in the production of ultra-thin flexible glass and displays for electronic devices. Wedge-shaped overflow trough and platinum alloy trough are used as forming equipment respectively.
Heavy soda ash accounts for about 30% of the production cost of float glass, and the production of 1 ton of glass needs to consume about 0. Every 10 yuan change in the price of heavy soda ash per ton will lead to a change in the cost of glass per box in the same direction. Output of flat glass in 2020 9. Heavy soda ash provides sodium ions in glass production and helps to clarify molten glass, which is irreplaceable in function and dosage. Since 2010, the soda ash industry has been restricted by the Access Conditions for the Soda Ash Industry, and it is strictly prohibited to continue to eliminate backward production capacity while adding new production capacity in the traditional main production areas. Since 2016, the total output of the industry has been maintained at about 27 million tons per year.
Although the Ministry of Industry and Information Technology abolished the access conditions in June 2020, the effective production capacity will not change much in the next two years due to the double control of energy consumption, carbon peak, carbon neutralization requirements and the construction and commissioning cycle of 2-3 years. According to iFinD data, as of January 28, 2022, the operating rate of soda ash enterprises exceeded 80%, the operating rate of float glass enterprises was nearly 90%, and the supply and demand around soda ash inventory showed a tight balance. According to the data of Zhuochuang Information, the potential new production capacity of photovoltaic glass in 2022 will increase the consumption of heavy soda ash by about 1 million tons. We believe that in the next 1-2 years, the price of soda ash will be affected by the rhythm of photovoltaic glass production capacity, and will remain relatively high around the inventory cycle, but large glass manufacturers can choose to purchase in large quantities or depress prices through overseas channels, thus gaining considerable profit elasticity. According to the data of the General Administration of Customs, at present, China's soda ash imports mainly come from the United States and Turkey, and the average price of imported soda ash in the two countries has been lower than domestic average price for a long time.
Siliceous raw material is the main component of glass, which is the most used in production. About 0.7 tons of silica sand (quartz sand) are consumed to produce 1 ton of glass. Every 10 yuan change in the price of a ton of silica sand will lead to the same change in the price of a box of glass. However, it is mainly composed of ordinary silica sand ore (quartzite ore and quartz sandstone ore) with high iron content, while low-iron high-quality silica sand ore (some natural quartz sand ore and vein quartz ore) is less, and the regional distribution is uneven, with the most abundant reserves in Hainan, Jiangxi, Shandong and Anhui. Most of the silica sand minerals can be used in the production of glass sheets only after being processed by mechanical crushing, mineral processing and other processes. Because of the large amount of silica sand used in the production process, float glass plants are often located near the silica sand producing areas, and achieve self-sufficiency through self-built placer mines to reduce costs. The iron content of
silica sand directly affects the light transmittance of finished glass, and the spectral selective absorption of iron element will reduce the visible light transmittance of finished glass. The use of high-quality silica sand with lower iron content can improve the quality of the original glass sheet. Therefore, low-iron silica sand must be used as raw material for ultra-clear glass which is more transparent than ordinary float glass. With the continuous expansion of photovoltaic industry in recent years, the demand for high-quality silica sand for photovoltaic glass and crystalline silicon batteries has continued to rise, and the total import of silica sand in China has gradually increased. According to the data of the General Administration of Customs, the total import of silica sand and quartz sand in 2021 is 345. Compared with the expensive import of silica sand and the complex transportation process of iron removal, The self-sufficiency of high-quality silica sand guarantees the quality of the original sheet and the cost advantage of ultra-white glass.
float glass sheets are mostly used as intermediate products to participate in subsequent deep processing and manufacturing, and the quality of float glass sheets directly affects the effect of subsequent deep processing. Deep processing processes include tempering, coating, hollow, vacuum, laminating, etc. The combination of different processes forms various products, and deep processing plants often arrange differentiated processing according to the specific needs of downstream. After being heated, the original sheet is quickly and uniformly cooled to form the toughened glass, the toughened glass has higher bending resistance and impact resistance strength, and when the toughened glass is damaged by an external force, fragments can form honeycomb-shaped obtuse angle small particles, so that the harm to a human body is reduced. The optical properties of glass can be changed by coating one or more metal compound films on the surface of glass, which can be divided into on-line coating and off-line coating. The former is completed in the tin bath annealing section of the float glass production stage, and is currently prepared by chemical vapor deposition (CVD), while the latter is processed by vacuum magnetron sputtering. The two methods have their own advantages and disadvantages. The on-line coating process has the advantages of large output, low energy consumption, simple process, cost saving, firm coating film, stable physical and chemical properties, and no need for secondary processing of products. The off-line coating process has strong flexibility, rich product types and functions, and the product has lower heat transfer coefficient and stronger functions in the production of low-emissivity coated glass. Insulating glass is composed of multiple layers of glass, which realizes the functions of heat insulation, sound insulation and radiation reduction through air interlayer. Vacuum glass is different from insulating glass in structure and technology. Because of the existence of vacuum interlayer, its performance is better than insulating glass, but the price is correspondingly higher. Laminated glass, also known as bulletproof glass, is a kind of safety glass made by sandwiching PVB film between two pieces of glass and pressing them under high pressure. When damaged by external force, the fragments will stick to the PVB film and form radial cracks, which will keep their original shape and continue to be used for a certain period of time.
Automobile and export demand account for about 10%. Automobile glass can be divided into front windshield, skylight glass and window glass according to the installation position. According to the approval draft of motor vehicle safety glass disclosed by the Ministry of Industry and Information Technology in 2020, the front windshield must use tempered laminated glass to ensure the safety of drivers and passengers. With the recovery of automobile production, the increasing penetration of SUV and new energy vehicles, and the increasing area of windows and skylights, the use of automobile glass will continue to rise. (Report source: Future Think Tank)
Float glass price: Demand stabilizes, supply is limited, float glass price center or slightly downward
supply: New production lines are limited, but high prosperity drives capacity increment
Since 2013, production restriction policies have been introduced continuously, and new incremental production lines are strictly prohibited at present. On July 2, 2021, the Ministry of Industry and Information Technology promulgated the revised Implementation Method for Capacity Replacement in Cement Glass Industry, explicitly prohibiting the filing and construction of new flat glass projects with expanded production capacity, and new projects need to formulate and implement capacity replacement. In addition, the measures have dealt with zombie production capacity, stipulating that since 2013, production lines and photovoltaic rolled glass production capacity that have been shut down for two consecutive years or more can not be used for replacement. According to the statistics of Zhuochuang Information and Longzhong Information, as of January 31, 2022, 106 float glass production lines have been suspended nationwide, of which 31 have been replaced and auctioned, and most of the remaining production lines have been suspended for more than two years. With the gradual withdrawal of these zombie production capacity, it is difficult to significantly increase the total production capacity of float glass in the future.
Demand: Real estate completion support, demand is expected to stabilize
. Real estate demand is expected to stabilize in 2022 under the support of completion. After deep processing, the glass sheet finally flows to the construction, and the construction party often orders on demand, which is not sensitive to the fluctuation of glass price. As the glass enters the site at the end of construction, its prosperity has a strong correlation with the completion data of real estate. We believe that the completion of real estate in 2022 is expected to stabilize, due to the following reasons: 1. Since 2016, the difference between real estate sales and completed area has continued to expand, the cumulative year-on-year growth of sales area has been higher than that of completed area for a long time, and the tightening of regulatory policies has limited the use of purchase funds and the turnover speed of real estate enterprises. The increase in completed area will be supported by the promotion of real estate enterprises to guarantee the delivery of houses; 2. In terms of TTM, the completion of real estate projects lags behind the new construction for about three years. Based on this, it is estimated that the completion in the first half of 2022 may reach a relatively high level, which is expected to boost the demand for glass.
Variables: supply changes lag, limiting the rigidity of supply in the 2022 price range
, and there is a lag relative to price changes. The characteristics of continuous production of float glass and the high cost of cold repair make the supply relatively rigid, and the production capacity can not be adjusted flexibly in the short term, which leads to the supply adjustment lagging behind the price change. At a higher price level, the production line has a strong willingness to resume production and a weak willingness to cold repair. Although the current price level of float glass sheets has fallen from the high point in 2021, it is still at a relatively high historical level, and the short-term supply increment may be greater than reduction under better profits.
Future development: Consolidate the cost advantage and continue to transform the high-end
cost advantage Casting higher gross profit margin
of raw glass The float glass raw glass business, which is the main source of the Company's revenue, has a higher gross profit margin in the same industry. Both Xinyi Glass and CSG combined the products with higher gross profit margin with the original float glass sheets for statistics: Xinyi Glass combined the original float glass sheets with the ultra-clear photovoltaic glass with higher gross profit margin for statistics, and CSG combined the original float glass sheets with the engineering glass with higher gross profit margin for statistics after 2017. Qibin Group's float glass sheets do not rely on additional high value-added products, and its gross profit margin is created by a higher self-sufficiency rate of silica sand and flexible procurement strategy.
The company attaches great importance to the self-sufficiency of silica sand and continuously reserves silica sand resources.The company's domestic production base is close to Dongshan, Zhangzhou, Donghai, Zhejiang, Heyuan, Guangdong, where high-quality silica sand is produced, and Negeri Sembilan, where Malaysia is located, has abundant silica ore reserves. At present, the company has four silica sand mines in production, with an annual output of about 2.16 million tons. Calculated by 90% of the qualified rate of silica sand beneficiation, it can meet the production capacity of about 55.5 million heavy boxes of glass sheets, and the self-sufficiency rate of silica sand is 47. The total annual production capacity of silica sand mines under construction and planning is 1.176 million tons. After full production, it can meet the production capacity of about 71.5 million heavy boxes of glass sheets. The self-sufficiency rate of silica sand has risen to 61.
The company is good at using centralized procurement and strategic procurement to achieve low-cost advantages. Relying on the advantages of scale, demand and channel, the company continues to maintain a low cost of purchasing bulk raw materials and fuels. From 2017 to 2019, the company's annual average purchase price of heavy soda ash was at a low level in that year, and the average purchase price of natural gas and other fuels was lower than national average price level in the same period. The company's purchasing strategy and bargaining power have been tested by time, and it is expected to continue to benefit from the rising prices of raw materials and fuels in recent years, creating sufficient flexibility for profitability.
In addition, in the face of the risk of large fluctuations in the price of bulk raw materials, the company announced in November 2021 to carry out hedging business, with the help of futures capital leverage, to lock in the cost of soda ash in advance and stabilize the cost disturbance. The amount of the company's hedging business position does not exceed 500 million yuan. Soda ash hedging can be realized at the main futures contract price of the current period 193.9-215.
to measure the performance of building energy-saving glass are heat transfer coefficient (K value), solar heat gain coefficient (SHGC) and visible light transmittance. The higher the heat transfer coefficient is, the worse the indoor thermal insulation performance is. The higher the solar heat gain coefficient is, the stronger the solar heat transfer capacity is, which is not suitable for cold regions. The higher the visible light transmittance is, the better the indoor light transmittance is, and the visible light transmittance of building glass should not be less than 0. From the point of view of glass structure, vacuum structure is better than hollow structure; Low-E coated glass is superior to other types of glass in terms of the performance of single glass.
Since 2010, building energy-saving glass has been continuously encouraged by policies. On October 13, 2021, the Ministry of Housing and Urban-Rural Development issued the mandatory national standard "General Code for Building Energy Conservation and Renewable Energy Utilization", which will be formally implemented on April 1, 2022. The new standard reduces the thermal coefficient threshold of glass windows, and requires that the building glass of new and renovated projects have better thermal insulation ability. The new standard has higher and more detailed requirements for the heat transfer coefficient (K value) of external window glass. After the implementation of the new regulations, ordinary double-layer insulating glass will no longer meet the thermal requirements in East and South China, the company's main markets, and must use coated hollow, vacuum glass or three-layer insulating glass to meet the requirements. According to the annual report of CSG, at present, the utilization rate of energy-saving building glass in China is less than 15%, which is far lower than that in developed countries, and the market prospects are broad with the help of policies.
building energy-saving glass has a high degree of personalization, the original glass sheet is usually made into hollow, laminated or vacuum glass products after coating and tempering treatment in the processing flow. At present, the domestic glass deep processing market is relatively scattered and the industry concentration is low. A large number of small middlemen and processing plants in the market make the product differentiation significant and the quality varies. With the continuous expansion of large-scale original film enterprises to the field of deep processing and the improvement of building energy-saving standards, the industry will gradually move towards scale and integration. According to the data of the National Bureau of Statistics, in 2020, the output of tempered glass in China will be 470 million square meters, the output of hollow glass will be 130 million square meters, the output of laminated glass will be 0.9 billion square meters, and the total output of deep-processed glass will be 6. According to the China Building Glass and Industrial Glass Association, the demand for deep-processed glass will reach 2.235 billion square meters in 2025. Compared with 2019, it increased by 38.8%, with a compound annual growth rate of 5.
Glass sheets accounted for about 80% of the cost of glass deep processing products. Relying on the strong production capacity of high-quality float glass sheets, the company has strong cost, quality and location advantages, and has the potential to break through in the market competition. The off-line Sanyin Low-E coated glass launched by the company adopts the most advanced and complex technology in the current domestic building energy-saving glass, with limited competitors and strong competitiveness. The product has the best thermal insulation performance while ensuring the visible light transmittance, which can better match the market demand in East and South China.
Qibin Group currently has four energy-saving glass production bases, three energy-saving glass projects under construction and expansion. The annual production capacity of the projects under construction and expansion is about 25.4 million square meters. It is expected that all of them will be put into operation in 2022, and the annual production capacity of equipment will reach 47.35 million square meters, ranking in the head echelon of deep processing. Since 2018, the company's deep processing business has been steadily put into operation with the continuous increase of gross interest rate, and the proportion of production capacity in the main business profit has increased year by year. Referring to CSG, Xinyi Glass and Yaopi Glass, the leading glass deep processing enterprises, the gross profit margin of Qibin Group's deep processing business is higher than average level, and there is still room for improvement, and the launch of new production capacity will further bring increments.
Because of the extremely low iron content in ultra-clear glass, the glass melt needs longer clarification and homogenization time in the melting process, so the ordinary float production line will face a certain loss of production capacity after conversion. In addition, the actual diathermancy of molten glass in low iron environment is poor, which will aggravate the damage of refractories at the bottom of the furnace, shorten the life of the furnace, increase the cost of hot repair and accelerate depreciation. Other additional technological transformation inputs are also required for the conversion, such as iron removal control at the raw material end, construction of silica sand homogenization silo, structural improvement of neck water drum and temperature regulation of small furnaces with different numbers.
The ultra-white float glass process is relatively stable, the product yield is high, and the application scenarios are wide. When used as solar cells, it is mostly used for the anode of thin film solar cells or the backplane of crystalline silicon double-glass modules. Compared with crystalline silicon solar cells, thin film solar cells have the advantages of flexibility, weak light, recyclability and temperature resistance. However, due to the low conversion efficiency and yield, the demand space for ultra-white float glass in thin film solar cells has not yet been opened. At present, the global thin film solar cell market is dominated by First Solar, an American company, whose production of cadmium telluride (CdTe) solar cells accounts for more than 60% of the global output. The domestic production of thin film solar cells is dominated by copper indium gallium selenide (CIGS) solar cells produced by Hanergy and China Building Materials, and the output is still small.
According to the invention patent published on October 1, 2021, Qibin Group has developed ultra-white rolled glass with a transmittance of 91.85% -92% at a thickness of 3.05-3.06 mm.
The application range is small, and the original sheet is usually used for the cover plate of the crystalline silicon solar cell after edge grinding, tempering and coating.When in use, the suede faces inward and the light faces outward for assembly, and the inverted pyramid-shaped patterns of the suede faces form a light trap, so that more incident sunlight can be bound, and the generating power of the battery assembly is improved. Calendering process is complex and not easy to master. Process parameter control and production environment and equipment will affect the product quality, resulting in low yield and high unit energy consumption.
The next 1 to 2 years is the outbreak period of domestic ultra-white rolled glass production capacity, will be put into production a number of production lines, the company did not have a rolling production line and technical reserves before, the new production line after ignition still needs a certain period of technical accumulation, good product climbing and market development, refer to the prospectus of Flat. It will take about 12-18 months for the production capacity of photovoltaic calendering production line to realize profit transformation, and the profit growth brought in the short term is limited
. Actively expand the category, and continue to cultivate electronic and pharmaceutical glass
. Qibin Group will invest in the future in 2018. Liling Phase II, a production line with a daily melting capacity of 65 tons of high aluminium cover glass, Liling Electronic Deep Processing Project and Shaoxing Qibin New Material Industrial Park, two production lines with a daily melting capacity of 65 tons of high aluminium cover glass will be built one after another.
High-aluminum cover glass is used for high-end electronic touch screen cover, which is in the upstream of the smartphone screen supply chain. The original sheet is sold to the deep processing enterprises in the middle reaches to make panel modules that meet the needs of customers, and finally sent to the downstream assembly plants. The original cover glass sheet has higher technical barriers and the strongest profitability. At present, the market of high-end cover glass is monopolized by foreign enterprises. According to the data of China Glass Network, Corning has a market share of more than 70% in smartphone cover glass. Benefiting from market share, patent blockade and technology accumulation, its product performance is leading and it is the catch-up target of all other manufacturers. There are few enterprises capable of producing high aluminum and higher performance lithium-aluminum cover glass and glass-ceramics in China, which mainly use the float process with low yield but sufficient technology accumulation. In recent years, with the development of domestic intelligent terminal equipment, domestic electronic glass enterprises continue to promote domestic substitution of accessories through significant price advantages, and gradually achieve technology accumulation and catch-up.
of Qibin Group, was ignited in January 2021 and put into commercial operation in October. The products include colorless and amber glass tubes, which can be used to produce packaging materials such as syringes, cassette bottles, ampoules and penicillin bottles. In the future, two production lines of neutral borosilicate medicinal glass with a daily melting capacity of 25 tons will be put into operation in Hunan Phase II Project and Shaoxing Qibin New Material Industrial Park. Glass products used
as drug package materials need better water resistance, acid resistance and alkali resistance due to long-term contact with drugs. European, American and Japanese pharmacopoeias all require the use of neutral borosilicate glass packaging for water injection with good performance in all aspects. Neutral borosilicate glass refers to borosilicate glass containing more than 8% of boron trioxide. The production process is divided into molding and tube. The former has low technical difficulty and thick bottle wall, which is mostly used to make large bottles such as infusion bottles. The latter has complex technology, relatively thin products and small capacity, which is mostly used to produce biological agent bottles. The demand for tube bottles is higher than that for molded bottles, and the market is dominated by three foreign companies, Corning of the United States, Schott of Germany and Nippon Electric Glass.
Profit Forecast
Financial Analysis
The Company's financial situation is good, and many indicators are in the leading position in the industry. While leading in scale, the company has shown high growth, with revenue growth, profit growth and gross profit margin at the leading level in the industry. Since 2016, with the improvement of internal management, the indicators have steadily improved. Benefiting from the high price of float glass in 2021 and the launch of deep processing capacity, the company's business income scale will continue to increase.
The company has strong profitability and operational capacity, low leverage ratio and large profit growth space. Compared with the same industry, the company's ROE is at a higher level in the industry and has strong profitability. In recent years, through a series of measures to optimize management, the net interest rate of the company's product sales has continued to rise, the speed of asset turnover has accelerated, and the level of leverage has declined, which has jointly promoted the steady rise of ROE. The company's equity multiplier is at a low level in the industry. After the completion of the acquisition of Zhejiang Glass in 2015, the company continued to improve its financial situation and reduce its debt ratio. At present, the low leverage ratio gives the company the potential for future development. In addition, the company's cash flow control is stable, with strong operational capacity, with the future capacity release, the company's cash flow situation is expected to continue to improve.
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