Flat(601865) SINOLINK SECURITIES·2024-10-30 10:30Investment Rating - The report maintains a "Buy" rating for the company [2][8]. Core Views - The company faces pressure on profitability due to a temporary oversupply in the photovoltaic glass market, but it continues to see growth in operating cash flow [3]. - The company reported a revenue of 14.6 billion RMB for the first three quarters of 2024, a year-on-year decrease of 8%, and a net profit attributable to shareholders of 1.296 billion RMB, down 34% year-on-year [3]. - In Q3, the company experienced a revenue of 3.9 billion RMB, a decline of 37% year-on-year and 21% quarter-on-quarter, resulting in a net loss of 203 million RMB [3]. - The company is managing inventory through production cuts and cold repairs of older furnaces, with a total of 2,600 tons per day of capacity being cold repaired in July and August [3]. - The report anticipates a potential turning point in inventory levels as the industry begins to reduce production significantly [3]. Summary by Sections Financial Performance - For 2024-2026, the forecasted net profit attributable to shareholders is adjusted to 980 million RMB, 2.47 billion RMB, and 3.38 billion RMB respectively, with corresponding PE ratios of 64/32, 25/13, and 19/9 [3]. - The company’s operating cash flow for Q3 was 1.27 billion RMB, reflecting a year-on-year increase of 54% and a quarter-on-quarter increase of 11% [3]. - The gross profit margin in Q3 decreased to 5.97%, yet remains above industry averages [3]. Market Conditions - The photovoltaic glass market is experiencing high inventory levels and declining prices, with the price of 2.0mm photovoltaic glass dropping to 12.5 RMB per square meter, a 21% decrease from the end of Q2 [3]. - As of the end of September, the industry inventory level reached 36.83 days [3]. Future Outlook - The report suggests that the company’s cost advantages and leading market position will support its recovery as the industry adjusts to the current oversupply situation [3]. - The anticipated production cuts across the industry are expected to lead to a turning point in inventory levels, potentially stabilizing prices in the future [3].