Zhuzhou Kibing (SH:601636) GF SECURITIES·2024-11-18 02:39Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 8.07 CNY per share, compared to the current price of 6.65 CNY per share [4][22]. Core Views - The company reported a revenue of 11.6 billion CNY for the first three quarters of 2024, a year-on-year increase of 3.7%, while the net profit attributable to shareholders was 699 million CNY, a decrease of 43.8% year-on-year. In Q3 alone, revenue was 3.689 billion CNY, down 14.21% year-on-year and 9.03% quarter-on-quarter, with a net loss of 112 million CNY, marking a 118.8% decline year-on-year and a 130.4% decline quarter-on-quarter [1][10]. Summary by Sections Photovoltaic Glass - The profitability of photovoltaic glass is under pressure due to declining prices and widespread industry losses. The average price of 2.0mm coated glass in Q3 2024 was 12.1 CNY per square meter, down 3.3 CNY from the previous quarter. The industry is experiencing a phase of supply-demand imbalance, leading to a reduction in production capacity [2][11]. - As of late September, the industry had a production capacity of approximately 9.3wt/d, down 14% from the peak in mid-July. The inventory days have stabilized around 37-39 days, indicating a potential turning point, although price increases may take time due to inventory digestion [2][11]. Float Glass - The float glass segment is validating the company's cost advantages as the industry undergoes concentrated cold repairs. The gross margin for the natural gas production line turned negative in July, with further losses expected in Q3. The industry is accelerating cold repairs, with significant reductions in production capacity observed [12]. - The gross margin for Q3 was reported at 7.7%, a decrease of 20.01 percentage points year-on-year and 14.87 percentage points quarter-on-quarter. The operating expense ratio increased to 13.7%, reflecting a challenging operating environment [12]. Financial Forecasts - The company is projected to have earnings per share (EPS) of 0.25, 0.36, and 0.51 CNY for the years 2024, 2025, and 2026, respectively. Given the cyclical nature of the glass industry and the current bottoming out of the market, a price-to-book (PB) ratio of 1.4x is applied for 2024, leading to a reasonable value estimate of 8.07 CNY per share [2][20][22]. - Revenue forecasts for the float glass segment are expected to be 71.02 billion CNY in 2024, with a gross margin of 21%. The photovoltaic glass segment is anticipated to generate revenues of 55.39 billion CNY in 2024, with a gross margin of 11% [14][17]. Operational Performance - The company's operational capabilities and cash flow remain robust, with inventory turnover days at 70 days and accounts receivable turnover days at 37 days as of Q3 2024. The net cash flow from operating activities was 299 million CNY, indicating strong cash management [13].