信义玻璃：静待浮法玻璃行业供需格局改善-20250308

Investment Rating - The report assigns a "Hold" rating to the company with a target price of HKD 8.68, indicating an expected upside of 11% from the current price of HKD 7.84 [1][6][11]. Core Views - The company is expected to experience a 31% decline in profit for 2024, with total revenue projected at RMB 22.324 billion, a decrease of 8.1% year-on-year. The earnings per share (EPS) is expected to drop to 79.23 cents, with a dividend payout ratio of 48.5% [3][8]. - The float glass industry is facing pressure due to weak demand, leading to price declines and increased inventory levels. The supply of float glass has decreased by 9.6% year-on-year, while the average order days for downstream processing enterprises have dropped by 39.3% [4][9]. - The company has a significant advantage in glass deep processing, particularly in the automotive glass sector, which is expected to see continued demand growth in 2025. The expansion of overseas production capacity in Malaysia is anticipated to mitigate the impact of U.S. tariffs [5][10]. Summary by Sections Financial Performance - In 2024, the company recorded a revenue of RMB 223.24 billion, down 8.1% year-on-year, with a net profit of RMB 33.69 billion, reflecting a 31% decrease. The basic earnings per share fell to 79.23 cents, and the total dividend for the year was HKD 0.41, with a payout ratio of 48.5% [3][8]. - The company is expected to reduce long-term loans significantly, leading to lower interest expenses and improved cash flow, enhancing financial stability [3][8]. Industry Outlook - The float glass market is currently under pressure due to excess inventory and weak downstream demand, particularly in real estate and processing sectors. The average inventory days have increased, indicating a need for supply-demand balance improvement [4][9]. - The average price of float glass has decreased, with the national weekly average price at RMB 1,334 per ton, down by RMB 9.80 per ton [4][9]. Future Projections - For 2025, the company anticipates a revenue increase to RMB 23.345 billion, representing a 4.6% year-on-year growth, with a net profit of RMB 3.446 billion, a slight increase of 2.3% [7][15]. - The dynamic dividend yield for 2025 is projected to exceed 5%, maintaining a stable high dividend policy [6][11].