我们给予福莱特玻璃“买入”的评级以及25.70港元的目标价。目标价相当于24.6倍/ 20.0倍/ 16.5倍2022至2024年市盈率或3.8倍/ 3.2倍/ 2.8倍2022至2024年市净率。
　　全球对太阳能材料的需求将持续上升。全球于2030年的新增太阳能装机容量预计将达到1,500吉瓦至2,000吉瓦，相较于2021年安装的168吉瓦将扩大至少10倍。假设2030年双玻组件渗透率达到75%，将需要约31.7万吨/日至42.3万吨/日的太阳能玻璃产能，因此太阳能玻璃的长期需求仍然相当强劲。到2024年底，中国太阳能玻璃产能仅约为13.4万吨/日。尽管短期内存在光伏玻璃产能过剩的风险，但未来几年光伏玻璃市场增长空间依然十分庞大。
　　积极的产能扩张将带来太阳能玻璃销量的显著增长。根据福莱特玻璃目前的扩张计划，其产能将由2021年的每天12,200吨增加至2022-2024年的每天19,400吨/ 25,400吨/ 30,200吨，进一步巩固其在光伏玻璃行业内的领先地位。据此，公司的太阳能玻璃销量预计将从2021年时的2.648亿平方米上升到2024年的9.439亿平方米，复合年增长率预计将达到52.8%。在稳定的毛利率以及太阳能玻璃销量大幅增长之下，预计公司净利润于2021年至2024年将以12.8%的复合年增长率增长，并于2024年达到人民币30.42亿元。
　　催化剂：全球太阳能投资增长强于预期，行业内太阳能玻璃新产能的投产速度慢于预期。
　　核心风险：太阳能玻璃的过度供应将导致价格下跌，原材料及能源价格上升

研究报告全文：股票研TableTitleJunZhu朱俊杰CompanyReportFlatGlass06865HK究85225097592EquityResearch公司报告福莱特玻璃06865HKjunjiezhugtjascomhk21December2022TableSummaryCapacityExpansionStrategytoBoostGrowthBuy产能扩张策略将推动增长买入公WeassignaBuyratingforFlatGlasswithaTPofHK2570TheTPTableRank司correspondsto246x200x165x2022-2024PERor38x32x28xRatingBuy2022-2024PBR报GlobaldemandforsolarmaterialsissettoriseNewlyinstalledsolar评级买入告capacitygloballyin2030isprojectedtoreachbetween1500GW-2000GWCompanyReportwhichistoexpandbyatleast10-foldfromthe168GWinstalledin2021Assumingdouble-glassmodulepenetrationtobe75in2030approximately6TablePrice-18mTP目标价HK25700317milliontpdto0423milliontpdofsolarglasscapacitywillbeneededthusthelong-termdemandforsolarglassremainsquitestrongOnlyaround0134milliontpdofsolarglassproductioncapacitywillbeinplaceinChinaatShareprice股价HK17860theendof2024Roomforsolarglassmarketgrowthwillbehugeoverthenext告fewyearsdespitetheshort-termriskofsolarglassovercapacity证Stockperformance报Significantgrowthofsolarglasssalesvolumetobebroughtby券aggressivecapacityexpansionBasedoncurrentexpansionplansofFlat股价表现究Glassitsproductioncapacityistoincreasefromamere12200tpdin2021toTableQuotePic研19400tpd25400tpd30200tpdin2022-2024respectivelyfurther300ofreturn研solidifyingitsindustryleadingpositioninthesolarglassindustryAssuchthe究200salesvolumeofsolarglassisestimatedtojumpfrom2648millionsqmin券100报2021to9439millionsqmin2024growingatCAGRof528Understablegrossmarginandasharpincreaseinsolarglasssalesvolumenetprofitis00证告estimatedtogrowatCAGRof128from2021to2024reachingRMB3042100EquityResearchReportmnin2024200CatalystsStronger-than-expectedgrowthinglobalinvestmentinsolar300energyslower-than-expectedcommissioningofnewsolarglasscapacityin400Tabtheindustry500leIKeyrisksOversupplyofsolarglasswillcausethepricetofallriseinenergy600清andrawmaterialpriceDec-21Mar-22Jun-22Sep-22Dec-22nfo1HSIFlatGlass洁我们给予福莱特玻璃买入的评级以及2570港元的目标价目标价相当于246倍200Solar倍165倍2022至2024年市盈率或38倍32倍28倍2022至2024年市净率能源全球对太阳能材料的需求将持续上升全球于2030年的新增太阳能装机容量预计将达到ChangeTablePriceChangeinSharePrice1M3M1Y1500吉瓦至2000吉瓦相较于2021年安装的168吉瓦将扩大至少10倍假设2030股价变动1个月3个月1年行Sector年双玻组件渗透率达到75将需要约317万吨日至423万吨日的太阳能玻璃产能Abs130138500业因此太阳能玻璃的长期需求仍然相当强劲到2024年底中国太阳能玻璃产能仅约为134绝对变动-ReltoHSIndex万吨日尽管短期内存在光伏玻璃产能过剩的风险但未来几年光伏玻璃市场增长空间依205180334太相对恒指变动然十分庞大AvgSharepriceHK193196269阳平均股价港元积极的产能扩张将带来太阳能玻璃销量的显著增长根据福莱特玻璃目前的扩张计划其SourceBloombergGuotaiJunanInternational能产能将由年的每天吨增加至年的每天吨吨CleanEnergy2021122002022-2024194002540030200吨进一步巩固其在光伏玻璃行业内的领先地位据此公司的太阳能玻璃销量预计将从2021年时的2648亿平方米上升到2024年的9439亿平方米复合年增长率预计将达到528在稳定的毛利率以及太阳能玻璃销量大幅增长之下预计公司净利润于2021年至2024年将以128的复合年增长率增长并于2024年达到人民币3042亿元Tabl催化剂全球太阳能投资增长强于预期行业内太阳能玻璃新产能的投产速度慢于预期eInf核心风险太阳能玻璃的过度供应将导致价格下跌原材料及能源价格上升YTableearEndTurnoverNetProfitEPSEPSPERBPSPBRDPSYieldROEo2年结Profit收入股东净利每股净利每股净利变动市盈率每股净资产市净率每股股息股息率净资产收益率1231RMBmRMBmRMBxRMBxRMB福2020A6260162908321262181354442022015277莱2021A871321200990190147550126000000223特2022F1474420470953371716243260230141622023F1804625151172230139725022028918174玻2024F2109830421417209115847619035622180璃TableBaseDataSharesinissuem总股数m21469Majorshareholder大股东MrRuanHongliangFamily522Flat06865GlassHKMarketcapHKm市值HKm383436Freefloat自由流通比率4063monthaveragevol3个月平均成交股数00052662FY22NetgearingFY22净负债股东资金69452WeekshighlowHK52周高低HK4085015500FY22EstNAVHKFY22每股估值港元321SourcetheCompanyGuotaiJunanInternationalSeethelastpagefordisclaimerPage1of25TablePageHeaderFlatGlass06865HK1raMthgiRelbaTTABLEOFCONTENTSINVESTMENTTHESIS3INDUSTRYOVERVIEW421December2022Globalsolarenergyinvestmentoutlooksolarmarketistoexpandby10-foldbetween2021and20304Surgingpolysiliconsupplyissettoboostsolarmoduleoutput7Recentupdatesandmarketanalysisonsolarglassindustry8Keypoliciesdrivingrenewableenergyinvestmentandsolarindustrydevelopment11COMPANYOVERVIEW14Companyprofileafastgrowingsolarglassindustrygiantaimingtoquicklyrampupitscapacity14CompetitiveadvantagesofFlatGlass2raMthgiRelb14aTBusinessmodel-PVglassisthekeygrowthdriver171-9M2022operatingresultsreview19EARNINGSFORECASTS20VALUATIONINVESTMENTRATING22CATALYSTS22RISKFACTORS22FINANCIALSTATEMENTSANDRATIOS2406865HK特玻璃莱福FlatGlassReportCompanySeethelastpagefordisclaimerPage2of25TablePageHeaderFlatGlass06865HKINVESTMENTTHESIS1raMthgiRelbaTDemandforsolarglasswillcontinuetorisethankstoaboomingsolarindustrySolarenergyisbecomingthecheapestsourceofrenewableenergyinmanypartsoftheglobethelowestsolaron-gridtariffauctionbidin2021wasamereUS104centskWhwhichislessthan13ofthelowestthermalpoweron-gridtariffinChinaThemarketexpectsthatnewsolarinstallationsgloballyin2030willreachbetween1500GW-2000GWwhichistogrowatleast10-foldfromapproximately168GWinstalledin2021TheglobalmarketremainsimmensegiventhecostcompetitivenessofsolarenergyAssumingthepenetrationofdouble-glasssolarmodulereaches75in2030approximately317407tpdtonsperdayto423210tpdofsolar21December2022glasscapacitywillbeneededin2030andthusthelong-termprospectsofsolarglassbusinessremainpositiveamidstronggrowthonglobalsolarenergyinvestmentAsaresultofsurgingpolysiliconsupplyinthemarketsolarmoduleoutputisexpectedtorisedrivingupdemandforsolarglassNewlyinstalledsolarcapacityintheworldin202220232024istoreach250GW380GW485GWrespectivelygrowingYoYby490520276Assuchsolarmoduleproductionvolumeisestimatedtobe313GW475GW606GWPolysiliconshortagehasbeensuppressingsolarinvestmentgrowthinthepast2yearsbutthingsarestartingtochangewiththeentryofnewproductioncapacitiesintothemarketDomesticsupplyofpolysiliconissettorisefromapproximately900kilotonsin2022to15milliontonsin2023whichissufficienttoproduce540GWofsolarmoduleandisprojectedtofurtherincreaseto222raMthgiRelbaTmilliontonsin2024Thesharpriseinthepolysiliconsupplyinthemarketwithitscostexpectedtodropin2023isaddingfueltoglobalgrowthonsolarinvestmentwhichwouldalsoboostdemandforsolarglassSolarglasssalesvolumeisexpectedtoriseataCAGRof528from2021to2024FlatGlassGroupFlatGlassortheCompanyisthesecondlargestsolarglassmanufacturerintheworldwithadomesticmarketshareofapproximately223in2022ThroughitsaggressiveexpansionstrategytheCompanynearlydoubleditsproductioncapacityfrom6400tpdtonsperdayin2020to12200tpdin2021BasedontheCompanyscurrentexpansionplansitsproductioncapacityissettofurtherincreaseto19400tpd25400tpd30200tpdin2022-2024respectivelyfurthersolidifyingitsindustry-leadingpositionAssuchthesalesvolumeoftheCompanyssolarglassisestimatedtorisefrom2648millionsqmin2021to9439millionsqmin2024growingataCAGRof528UnderastablegrossmarginandasharpincreaseinsolarglasssalesvolumethenetprofitofFlatGlassisestimatedtogrowataCAGRof128from2021to2024reachingRMB3042mnin202406865HKHowourviewdiffersfromthatofthemarketThemarketisconcernedthatsolarglassproductioncapacityintheindustryis特玻璃growingtoofastoutpacingthegrowthofsolarglassdemandandisaddingpressureonthepriceofsolarglassInshortthe莱福marketthinksthatoversupplyriskisincreasingwithinthesolarglassindustryWebelievethatthepublichearingsconductedbyindustryassociationsonnewsolarglassproductioncapacitywillbecomemorestringentinabidtorestrictunnecessaryandnon-competitivecapacitiesfromenteringthemarketShouldovercapacityriskincreasesomeoftheprojectswillbedelayedorFlatGlassevenpostponedtolateryearsBesidesfollowingadding369thousandtpdofnewcapacityin2022and327thousandtpdin2023weexpectthatnewcapacitytobeaddedin2024willslowdownsubstantiallyfortheindustrytodigestthehugecapacitieslaunchedin2022and2023MeanwhileglassmakerscanalsoreducetheirutilizationratestokeeptheindustryinventorylevelfromrisingtoofasthurtingsolarglasssellingpriceLastlyweexpectgrowthinthepenetrationofdouble-glassmoduletofurtherincreasefrom40in2022toapproximately55in2024drivingmoredemandforsolarglassdouble-glassmodulerequires25moreglassusageWebelievetheovercapacityrisktheindustryfacesiscontrollableandsolarglasspricewillremainstablein2023and2024HoweverfullcompetitionistobeexpectedinthesolarglassindustrywhereinindustryleaderswithcostadvantageslikeFlatGlassaresettoprevailamidintensifiedmarketcompetitionTheproductioncostofFlatGlassisamongthelowestinthesolarglassindustryCatalysts1Afurtherdropsolarglassindustryaverageinventorylevelwilldriveupsolarglassprice2slower-than-expectedcommissioningpaceofnewproductioncapacitiesintheindustry3stronger-than-expectedglobalsolarinstallations4asharpriseinupstreampolysiliconsupplyissettoboostdownstreamsolarmoduleoutputdrivingupdemandforsolarglass5increaseReportinpenetrationofdouble-glasssolarmodule6signingofmorelong-termsolarglasssupplyagreementsCompanyKeyRisks1Overcapacitywillcausesellingpricetoplunge2riseinrawmaterialandenergycosts3globalsolarinstallationsmaymissexpectationSeethelastpagefordisclaimerPage3of25TablePageHeaderFlatGlass06865HKINDUSTRYOVERVIEW1raMthgiRelbaTGlobalsolarenergyinvestmentoutlookthesolarmarketistoexpandby10-foldbetween2021and2030SolarpowerisbecomingthecheapestsourceofenergyinmanypartsoftheworldandisdrivingtheglobalenergytransitionFollowingdecadesofdevelopmentsolarpowerhasachievedgridparityinmanycountriesandregionsaroundtheglobeandithasbecomethecheapestpowersourceinthosecountriesregionsAccordingtoSolarPowerEuropetheAlShuaibasolarprojectinSaudiArabiawonasolarfeed-intarifftenderofUS104centsperkWhin2021whichislessthan13ofthelowest21December2022thermalpoweron-gridtariffinChinaTheawardedtariffhassetanewglobalrecordlowandwaslowerthanthe2020tenderinPortugalwhichhadtheworldslowestsolarfeed-intariffofUS132centsperkWhin2020TheUS104centsperkWhrecordedinSaudiArabiain2021wasabout212lowerthanthatseeninPortugalayearearlierTheworldstop10solarprojectswiththelowestsolarelectricitytariffin2021werenothigherthanUS350centsperkWhandallarelocatedinmarketsoutsideofChinaThebiddingresultsofoverseassolarprojectshaveverifiedtheincreasinglycomprehensivecompetitivenessofsolartechnologyWiththeadvantagesofsolarenergyandthecontinuousimprovementonitscostcompetitivenessglobalinvestmentonsolarenergyissettoenteraperiodofrapidgrowthAccordingtoLONGiEnergyResearchInstitutenewsolarinstallationsgloballyin2030willreachbetween1500GWand2000GWwhichisroughlyaten-foldincreasefromtheapproximately168GWinstalledin2021Assuchweexpectthatglobalmarketdemandforsolarmaterialswillremainonanuptrendintheyearstocome2raMthgiRelbaTFigure-1SolarelectricitycosthasbecomethecheapestsourceFigure-2Solarelectricitygenerationcostcomparedtoofpower2009-2021conventionalpowersourcesin202106865HK特玻璃莱福SourceSolarPowerEuropeSPEGuotaiJunanInternationalSourceSPEGuotaiJunanInternationalFlatGlassFigure-3Thelowestsolarauctionbidsaroundtheworldin2021ReportSourceSPEGuotaiJunanInternationalCompanySeethelastpagefordisclaimerPage4of25TablePageHeaderFlatGlass06865HKGlobalnewlyinstalledsolarcapacityisexpectedtoexceed200GWin2022AccordingtodatafromSolarPowerEuropeSPEtheworldstotalnewlyinstalledsolarcapacityin2021reachedapproximately1681GWrarepresentinMthggiaRyeare-onl-yearbaTincreaseof214Thetopfiveglobalmarketsin2021wereChinaadded549GWup140YoYtheUnitedStatesadded273GWup422YoYtheEuropeanUnionadded259GWup342YoYIndia142GWaddedup2641YoYandJapan64GWaddeddown220YoYThetopfivemarketsintheworldcollectivelycontributed1287GWofnewsolarinstallationsin2021accountingforabout767oftheglobaltotalduringtheyearWeexpectChinaUSandEUmarketstocontinuetobetheworldslargestsolarmarketsoverthenextfewyearsaccountingformorethan55ofglobalannualsolarcapacityadditionsfrom2022to2024Ascountriesarerollingoutambitiousrenewableenergyinvestmentplanstomeettheir21December2022obligationsundertheParisclimateagreementoverseasmarketsareexpectedtoplayamoreimportantroleasamajorgrowthengineforglobalsolarenergyinvestmentShortagesinpolysiliconsupplyin2021ledtoaspikeinsellingpriceandalsorestrainedglobalgrowthofsolarinstallationsduringtheyearWiththesuccessfulcommissionofpolysiliconnewproductioncapacityin2022andonwardsweestimatenewlyinstalledsolarcapacitygloballytoreach250GW380GW485GWin202220232024respectivelyrepresentingYoYincreaseof490520276WebelievethatoverseasmarketswillbeanimportantgrowthdriverofglobalsolarinstallationsinthenextfewyearsFigure-4HistoricalglobalnewlyinstalledsolarcapacityFigure-5Top10solarmarketsin20212raMthgiRelbaT06865HKSourceSPEGuotaiJunanInternationalSourceSPEGuotaiJunanInternational特玻璃莱福Table-1GlobalsolarinstallationsforecastsCountryregion202020212022E2023E2024EFlatGlassChina485590120150UnitedStates1927355267EuropeanUnion1926334558India414161821Japan86778Australia56678Brazil36899SouthKorea54556Vietnam122345Others152148113154Total138168250380485Contributionfromthetop3markets627644632571567SourceSPEGuotaiJunanInternationalUnitGWReportCompanySeethelastpagefordisclaimerPage5of25TablePageHeaderFlatGlass06865HKNewlyinstalledsolarcapacityintheChinamarketisexpectedtobenolessthan85GWin2022andissettobreakthe100GWkeymilestoneassoonas2023AccordingtodatafromtheNationalEnergyAdministration1raMthnewlygiRinstalledelsolarbaTcapacityinChinain2021reached549GWaYoYincreaseof140Inwhichnewlyaddeddistributedsolarprojectshit293GWupYoYby534anditsproportioninthenewlyinstalledcapacityin2021exceeded50forthefirsttimeDuringtheyearnewlyinstalledcapacityofhouseholdsolarprojectsreached216GWaYoYincreaseof113andthenewincreasealsoreachedarecordhighIncontrasttheadditionofcentralizedsolarpowerplantsduringtheperiodreached256GWaYoYdecreaseof217Bytheendof2021thecumulativeinstalledcapacityofdomesticsolarenergyreached3066GWaYoYincreaseof209Amongwhichthecumulativeinstalledcapacityofdistributedsolarprojectsreached1075GWaccountingfor21December2022aboutone-thirdofthecountrystotalinstalledsolarcapacityTheaveragesolarpowerutilizationhoursin2021amountedto1281hoursroughlythesameasthatof2020Nationwidesolarpowergenerationin2021amountedto3259billionkWhupYoYby251AccordingtodatafromtheNationalEnergyAdministrationNEAofChinanewlyinstalledsolarcapacitynationwidefromJanuarytoNovember2022was6571GWup887YoYAsattheendofNovember2022Chinascumulativeinstalledsolarcapacitywas37202GWayear-on-yearincreaseof294Totalinvestmentinsolarpowerprojectsinthefirst11monthsofthisyearwentup2901YoYandamountedtoRMB200billionSolarpowerutilizationinthefirst11monthsof2022reached1260hoursanincreaseof66hoursfromthatoflastyearInearly2022theChinaPhotovoltaicIndustryAssociationestimatedthatnewlyinstalledsolarcapacityinChinathisyearwillbebetween75GW-90GWbuttheforecastrangewasrevisedupto85GW-100GWinlateJuly2022WebelievethatnewinstalledcapacityintheChinamarketwillnotbelowerthan85GWin2022andwillexceedthe100GWkeymilestoneinasearlyas2023providingrobustsupporttogrowth2ofrglobalaMsolarthginstallationsiRelWebaTexpectdomesticnewlyinstalledsolarcapacityfrom2022to2024tobe90GW120GW150GWrespectivelyFigure-6Globalsolarinstallationsforecastsin2022Figure-7Chinasolarinstallationsforecastsin202206865HK特玻璃莱福SourceCPIAGuotaiJunanInternationalSourceCPIAGuotaiJunanInternationalFlatGlassTheUSmarketissettoadd35GWofnewsolarsystemsin2022followingrecording42YoYgrowthin2021TheUSmarketrecorded273GWofnewlyinstalledsolarcapacityin2021up422YoYmaintainingremarkablegrowthseenin2020whereinyoygrowthof43wasrecordedinthatyearThestronggrowthinnewinstallationsintheUSmarketcameprimarilyfromtheutilityscalesegmentieconcentratedsolarfarmwhereinarecord197GWwasinstalledor72oftotalinstallationsinthecountryStronginstallationgrowthinTexashasallowedittoreplaceCaliforniaasthestatewiththehighestsolarinstallationsintheUnitedStatesforthefirsttimeTheresidentialsegmentroof-topPVsystemadded49GWofsolarcapacityup51YoYdrivenbythedecliningsolarinvestmenttaxcreditITCTheresidentialsegmentreachedanothermilestoneforthenationwhereinmorethan500000systemswereinstalledinoneyearSolarpoweraccountedfornearly46ofallnewpowerinstallationsintheUSmarketin2021makingitthe3rdyearinsuccessionthatsolarheldthetopspotTheInflationReductionActof2022thebillwhichcoversvariousclimateandenergyprogramsandwasofficiallysignedbyUSPresidentBidenon16August2022issettoincreasesolarprojectsITCtaxcreditofupto30andextendresidentialenergypropertycreditthrough2032inabidtoencourageinstallationsofrooftopsolarsystemsThebillisexpectedtostimulateUSmarketdemandandsolarReportinstallationsscaleintheUSmarketmayreachnewheightsinnextfewyearsAsaresultofthepassingofthebillnewlyinstalledsolarcapacityintheUnitedStatesin2022isexpectedtoreach35GWandmayfurtherclimbtoabove50GWassoonas2023solidifyingtheUSmarketasthesecondlargestsolarmarketintheworldWeexpectnewlyinstalledsolarcapacityintheUSCompanymarkettobe35GW52GW67GWfrom2022to2024respectivelySeethelastpagefordisclaimerPage6of25TablePageHeaderFlatGlass06865HKTheEUmarketislookingbrightwith259GWofnewcapacityaddedin2021andissettoincreaseitssolarinstallationsto33GWin2022AccordingtoSPEthe27memberstatesoftheEuropeanUnion1ratheMEUthmarketgiRaddedenollessbaTthan259GWofnewsolarcapacityin2021whichwasup342fromthe193GWinstalledayearearlierAlmost90ofEuropeanmarketsaddedmoresolarcapacityin2021thantheprioryearSimilartothepreviousyearsGermanyremainedEuropesbiggestsolarmarketin2021with60GWofnewlyinstalledsolarcapacityfollowedbySpainadded48GWPolandadded38GWtheNetherlandsadded36GWandFranceadded27GWThetop5marketsintheEUstayedthesamein2021asthosein2020In202125ofthememberstatesaddedmoresolarsystemsthanayearbeforeCumulativeinstalledsolarcapacityintheEUwentup19YoYandreached1649GWattheendof2021withGermanyaloneoperating606GWofsolar21December2022capacityDrivenbytheambitiousgoalofGermanysnewadministrationpost-Merkeltodoubleits2030solaroperatingcapacitytoatleast200GWGermanyisexpectedtoaccelerateitsinvestmentonsolarenergywithmorethan10GWofnewinstallationsperyearallthewayto2030UnderthemediumscenarioSPEexpectsthat1627GWofsolarcapacitywillbeaddedintheEUmarketbetween2022and2025implying407GWofnewinstallationsperyearduringtheperiodDuetothehighflyingconventionalenergypricesandtheurgencytoincreasetheproportionofrenewablesinprimaryenergyconsumptionweexpectthatinvestmentonsolarenergyintheEUmarketwillcontinuetobeatexpectationforyearstocomeWeexpectnewlyinstalledsolarcapacityintheEUtobe33GW45GW58GWfrom2022to2024respectivelyTheEUmarketispoisedtoremainasthe3rdlargestsolarmarketintheworldduringthe3-yearperiodHoweverdemandinEUmarkethasgrownstrongerthanexpectedespeciallyaftertheconflictinUkrainewhichstartedinFebruary2022wewontruleoutthepossibilitythattheEUmarketwillovertaketheUSmarketinthenext2-3years2raMthgiRelbaTSurgingpolysiliconsupplyissettoboostsolarmoduleoutputTheentryofnewpolysiliconproductioncapacityissettoboostsolarmoduleoutputThesupplyshortageofpolysiliconisthecorefactorsuppressinggrowthofsolarinstallationsgloballyandthegrowthrateofnewlyinstalledsolarcapacitygloballywilldependonthepaceatwhichnewpolysiliconproductioncapacityisputintooperationThesolarindustryiscurrentlyinastatethatsupplytheupstreampolysilicondeterminesdemandmoduleproductionandglobalsolarinstallationsAtpresenttheprofitoftheentiresolarindustryvaluechainiscenteredaroundtheupstreampolysiliconsegmentandthehighprofitabilityisattractingmanynewmarketentrantstothepolysiliconmarketapproximately8newplayersmarketentrantsaresettoenterthemarketinlate2023and2024bringingwiththematleast500000tonsinnewproductioncapacityGlobalsolarinstallationsarerelianton06865HKthesupplyofsolarmodulesandoutputofsolarmodulesislargelydependentonthesupplyofpolysiliconwhichrequiresanexpansioncycleofapproximately24monthsTheshortsupplyofpolysiliconsince2H2020hassentitssellingpricespikingtoa特玻璃10-yearhighseenrecentlyThegradualramp-upinthesupplyofpolysiliconfrom2H2022andonwardswillboosttheproduction莱福volumeofsolarmodulesaswellasglobalsolarinstallationsDomesticproductioncapacityofpolysiliconisestimatedtoreach12milliontonsperannumbyendof2022andFlatGlassfurthertoabove2milliontonsperannumbytheendof2023Domesticproductioncapacityofpolysiliconwasapproximately520000tonsin2021up238YoYPolysiliconproductionvolumeamountedto505000tonsin2021up288YoYTakingintoconsiderationthe104000tonsofnetpolysiliconimportstotalsupplyofpolysiliconintheChinamarketreachedapproximately609000in2021up243YoYAsdomesticpolysiliconcapacityispoisedtohit12milliontonsbyendof2022andabove22milliontonsbytheendof2023accordingtotheSiliconIndustryofChinaNonferrousMetalsIndustryAssociationweestimatedomesticpolysiliconproductionoutputtobe820000tonsin2022and145milliontonsin2023Takingintoconsiderationpolysiliconimportsnetdomesticpolysiliconsupplyisprojectedtobe915000tonsin2022and15milliontonsin2023sufficienttoproduceapproximately320GWand540GWofsolarmodulesin2022and2023respectivelyThedramaticriseinthesupplyofpolysiliconin2023andonwardswillclearthecurrenthindranceandaccelerategrowthofglobalsolarinstallationsPriceofpolysiliconbeguntodropinearlyDecember2022andthedowntrendisexpectedtocontinuethroughout2023whichisexpectedtostimulatetheoutputofsolarmodulesanddriveupdemandforsolarglassReportCompanySeethelastpagefordisclaimerPage7of25TablePageHeaderFlatGlass06865HKFigure-8CapacityandoutputofpolysiliconinChinaFigure-9TotalpolysiliconsupplyinChinamarket1raMthgiRelbaTProductioncapacityOutputUtilizationrateDomesticsupplyNetimport23383001200250269538250100022302300200150020080014501505015060021December2022121023010091510000ton10000ton1008204006099552048549014538845242050539739250104502593422001439882138505259342392000020182019202020212022E2023E2024E20182019202020212022E2023E2024ESourceCPIAGuotaiJunanInternationalestimatesSourceCPIASiliconIndustryofCNMIAChinaCustomsGuotaiJunanInternationalestimates2raMthgiRelbaTRecentupdatesandmarketanalysisonthesolarglassindustryChinassolarglasscapacityisexpectedtogrowataCAGRof480from2021to2024reachingapproximately133880tonsperdayattheendof2024Chinasdailysolarglassproductioncapacitybyyear-end2014reached13550tonsdayaccordingtoSCIacommoditymarketinformationserviceproviderinChinaanditstotalproductioncapacityfurtherclimbedto41260tonsdaybyyear-end2021representingaCAGRof172from2014to2021Chinamaintains67solarglassfurnacesand231productionlinesasatDecember2021Attheendof2021thetop3solarglassproducersinChinamadeup599oftotaldomesticsolarglasscapacityandtheyareXinyiSolarFlatGlassandLuoyangCNBMThesebigsolarglassmanufacturersaretobenefitfromgrowthofthesolarglassindustrydrivenbytheglobalsolarenergyinvestmentcrazeduetotheirhigheroperatingefficiencybetterproductqualityeconomiesofscaleandgreaterbargainingpowerwhendealingwithsolarglassbuyersandrawmaterialsuppliersXinyiSolarandFlatGlasseachhavemassivecapacityexpansionplansofnoless06865HKthan10000tonsperdayoverthenexttwoyearsInourownforecastsaccordingtoallthecapacityexpansionannouncementsofallmajorsolarglassproducersinthemarketdomesticsolarglasscapacitywillbeincreasedfromthe41260tpdin2021to特玻璃78180tpd110880tpd133880tpdin2022-2024respectivelywithnetannualadditionof36920tpd32700tpd23000tpd莱福duringtheperiodseeTable-2NewcapacityadditionwillbeonadowntrendinabidtoreduceindustryovercapacityriskinourviewFlatGlassFigure-10Priceof20mmProcessedPVGlassinChinaFigure-11Priceof32mmProcessedPVGlassinChinaRMBsqm36312621161161ReportSourceSolarzoomGuotaiJunanInternationalSourceSCIGuotaiJunanInternationalCompanySeethelastpagefordisclaimerPage8of25TablePageHeaderFlatGlass06865HKLargefurnacescansaveupto20insolarglassproductioncostcomparedtosmallfurnacesThesolarglassindustrygrowsinaccordancewiththeriseinglobalsolarinstallationsandthemedium-tolong-1termraprospectMthsgofitheRglobalelsolarbaTindustryarequitebullishthankstoaglobalconsensusincurbingcarbonemissionsinanefforttotackleclimateissuesNewlylaunchedlargesolarglassfurnacesofover1000tonsperdayhavecompetitivecostadvantagecomparedtosmallfurnacesEvenifsolarglasspricefallstotheindustrybreakevenpointasaresultofshort-termovercapacityofsolarglassthetier-1solarglassproducerswithnewerandlargerfurnaceswillstilloutperformtheirpeersthatoperatesmallerfurnacesItisestimatedthatsolarglassproducedbylargefurnaceswithscaleof1000tonsorabovewillsavebetween10and20ofproductioncostcomparedtothatofsolarglassproducedbysmallonesoflessthan700tonsTheprimaryreasonbehindthecostsavingsisthe21December2022economiesofscaleMeanwhilethelargeplayersintheindustryhavebeenacquiringquartzminestofurtherreducetheirprocurementcostsThetier-1solarglassmakersintheindustryarepoisedtoprevailascompetitionintensifiesinthenext2yearsandthemarketwillbeexpectingnewerandlargerfurnaceswithhigherproductionefficienciesandlowercoststocommenceoperationSolarglasssellingpriceinthenexttwoyearsisexpectedtofluctuateattherangeseenin2022The32mmsolarglasspricestartedtheyearof2021atRMB42sqmandfell476toRMB22sqmbylateJunebeforesurgingby364toRMB30sqminOctober2021seeFigure-7accordingtostatisticsfromSCISublimeChinaInformationaChinesecommoditiesdataproviderGlasspriceweakenedin4Q2021to1H2022duetothehighinventorylevelasaresultofsharpincreaseinglasssupply32mmsolarglasspriceaveragedatRMB27sqmin2022seeFigure-211rConsideringaMthgitheRmoreelthanbaT30000tpdofnewsolarglassproductioncapacitieslaunchedin2022andwithmorecomingin2023weexpectthesolarglasssellingpricetoremainunderpressureinnexttwoyearsIndustry-widesolarglassinventoryinNovember2022reached4026kilotondown180YoYIndustryaverageinventorydaysseeFigure-12reached167daysattheendofNovember2022downMoMby141HighsolarglasspricewillunderminetheprofitabilityofdownstreamsolarmodulesandcouldaffecttheproductionplansofsolarmodulemakersandnormalsolarglasssellingpriceisbelievedtobehealthierforthedevelopmentoftheentiresolarindustryWeexpectsolarglasspricein2023-2024tofluctuateattherangeseenin202232mmglassatRMB24-28sqm20mmglassatRMB175-21sqmHighsolarglasspricehasbecomehistoryatleastitwonthappenbeforeyear2025inouranalysisandfullcompetitionisexpectedtobeseeninthesolarglassindustryWebelievethatonlythetier-1glassmakerswithtechnologicalfundingandproductioncostadvantageswillprevailTable-2ProductioncapacityofkeyChinesesolarglassproducershistoricalandforecasts06865HK2019202020212022E2023E2024EXinyiSolar7800980012800198002680031800FlatGlass5400640012200194002540030200特玻璃莱CNBMLuoyang210036203620612085209720福Irico240024003150315061508150Jinxin195019502520252035204520FlatGlassAlmaden6506501950195039505950CSG130013001300570081009300Kibing100010001000340070008200Ancai900900900260035004500Sanxin9009001450145022502250XFX550550550240036004800Others231029703720135901599018390Totalcapacities27260324404516082080114780137780Overseascapacities190029003900390039003900Totaldomesticcapacities25360295404126078180110880133880SourceSCIthecompaniesGuotaiJunanInternationalestimatesNoteXinyiSolarandFlatGlasshaveatotalof3900tpdofoverseascapacitySolarglassproductioncapacityisexpectedtoremainlargerthandemandfrom2023to2024BasedonthecalculationofReport75outputrateyieldrateprocessingrateforsolarglassand205conversionefficiencyofsolarmoduleshoulda1000tpdsolarglassproductionlineproduceconventionalglasswithathicknessof32mmthecorrespondingsolarmoduleoutputwouldbeapproximately701GWandifthesamewillbeusedtoproducethinglasswithathicknessof20mmthecorrespondingCompanymoduleoutputwouldbeapproximately561GWAssumingthedouble-glassmodulepenetrationrateof405255in2022-2024respectivelytheaveragesolarglassproductioncapacitiesfrom2022-2024willbesufficienttoproduce385GWSeethelastpagefordisclaimerPage9of25TablePageHeaderFlatGlass06865HK594GW764GWofsolarmodulesbasingontheseassumptionsFurtherglassdemandtoaverageglasscapacityratioisestimatedtobe821809803seeTable-3from2022-2024respectivelyWeexpect1rthataMglassthsupplygiRwillebellargerbaTthandemandandapricehikeonsolarglassmaynothappeninthenextfewyearsandthesellingpriceofsolarglassistoremainstablein2023and2024Priceofthemainrawmaterialinproducingglasssodaashisexpectedtoremainstablein2023andonwardsgivenaweakmarketoutlookforfloatglassinChinaAttheendofNovember2022themainstreamex-factorypriceoflightsodaashwasRMB2500-2700tonandtheaverageex-factorypriceoflightsodaashwasRMB2609tonadecreaseof13compared21December2022withtheaveragepriceonOctober28AsatNovember28domesticmainstreamsellingpriceofdensesodaashwasRMB2700-2800ton04higherthanthepriceonOctober28ThepriceofsodaashisexpectedtomaintainatthecurrentlevelandfluctuatebetweenRMB2500andRMB3000pertonin2023Sodaashaccountedforapproximately29inthecoststructureofsolarglassproductionSilicasandrepresentsanother20ofthecostandtheglassmakersintheindustryhavebeenacquiringsilicasandminesacrossChinatolockinsilicasandsupplyandtoreduceprocurementcostEnergycostsmainlynaturalgashaverisensharplyin2022duetothemilitaryconflictinUkraineandtier-1companieshavemaintainedstableproductioncostviathelaunchingofnewerlargerandhigherefficiencyfurnacesaswellasanincreaseinself-suppliedsilicasandFigure-12HistoricalsolarglassinventoryinChinaFigure-13Historicalsolarglassproductioncapacity2raMthgiRelbaTTonsPerDayYoYGrowth8000090700008060000706050000504000040TonDayTon3000030200002010000100006865HK2122202021212222202020212121212222202020212222202021212222202120212222-----------------------------------JulJulJulAprOctAprOctAprOctJunJunJanJanJanJunFebFebFebSepAugSepAugAugSepMarMarMarDecNovDecNovNovMayMayMay特玻璃莱SourceSCIGuotaiJunanInternationalSourceSCIGuotaiJunanInternational福Figure-14Domesticmarketshareofsolarglassmakers2022Figure-15SolarglassproductioncapacityforecastFlatGlassTotalcapacityinChinaYoYgrowthXinyiSolar160000895100FlatGlass17114000013388090230LuoyangCNBM80IRICO120000110880317019Jinxin1000006033Almaden78180418800003975044SouthGlassTonDayTon40KibingGroup60000259165732234126020730Ancai400002954025360Sanxin2020000102540XFXGlass7932Others-02019202020212022E2023E2024EReportSourceSCIGTJAIestimatesNotecalculationnotincludingoverseascapacitiesSourceSCIGuotaiJunanInternationalCompanySeethelastpagefordisclaimerPage10of25TablePageHeaderFlatGlass06865HKFigure-16Historicalpricetrendofkeyrawmaterials1raMthgiRelbaT21December2022SourceSCIGuotaiJunanInternationalTable-3Supplyanddemandanalysisofsolarglass202020212022E2023E2024EGlobalsolarinstallationsGW1382167825002raMt3800hgiRe4850lbaTSolarmoduleproductiondemandGW12461820312547506063Overproductionratio90108125125125Solarglasscapacityatyearendtpd295404126078180110880133880Averagesolarglasscapacityoftheyeartpd2745035400597209453012238032mmglass701GW1000tpd-module19262483418966318585equivalentGW20mmglass561GW1000tpdmodule15401987335153056868equivalentGW32mmglasspenetration807060484520mmglasspenetration2030405255Demandforsolarglasscapacitytpd1865127891490037651698307Capacitydemandaveragecapacityratio67978882180980306865HKSourceCPIASPEGTJAInternationalestimatesNoteassumeglassoutputrateof75andconversionrateof205for32mmand20mmglassproduction特玻璃莱福KeypoliciesdrivingrenewableenergyinvestmentandsolarindustrydevelopmentTheroadmaptoachievingChinascarbonneutralitywasofficiallyannouncedPresidentXiJinpingsaidatthegeneralFlatGlassdebateofthe75thUnitedNationsGeneralAssemblybackin2020thatChinawillincreaseitscontributionbyadoptingmoreeffectivepoliciesandmeasuresandstrivetoachievecarbonpeakingbefore2030andcarbonneutralitybefore2060AsthelargestdevelopingcountryandcurrentlythecountrywiththelargestcarbonemissionsChinaannouncedthatitwillachievecarbonneutralityby2060whichmeansthatChinasentiresocietymusttakeimmediateactioninabidtocompletethetransitiontonetzeroemissionsinthenext40yearsFrom2030to2060fromcarbonpeakingtonet-zeroemissionswithinthreedecadesnamelycarbonemissionsandcarbonsinksinallsectorsofthesocietywillbeinbalanceTheenergytransportationandindustrialsectorswhicharemajorcarbonemittersaswellaskeyprovincesandcitieswithhighcarbonemissionlevelsneedtotaketheleadinachievingnetzeroemissionsFortheenergysectorthataccountsforthelargestshareofcarbonemissionsthecurrentcarbonneutralitygoalmeansthattraditionalfossilenergysourceswillbegraduallyphasedoutMoreinvestmentonrenewablepowersourcesisexpectedtobemadeinnextthisdecadeandthenextTheNationalEnergyAdministrationofChinaissuedthe14thFive-YearPlanforRenewableEnergyDevelopmenttopromotethedevelopmentofwindpowerandsolarenergyIssuedinearlyJuneof2022thisdevelopmentplanoutlinescarbonpeakingcarbonneutralityandthelong-termgoalof2035Inaccordancewiththetaskrequirementsofnon-fossilenergyReportconsumptionaccountingforabout20ofprimaryenergyconsumptionin2025itwillvigorouslypromotethedevelopmentandutilizationofrenewableenergypowergenerationandactivelyexpandthescaleofrenewableenergypowergenerationandutilizationThemaindevelopmentgoalsofthe14thFive-YearPlaninclude1TotalrenewableenergyconsumptiontargetByCompany2025thetotalrenewableenergyconsumptionwillreachtheequivalentofabout1billiontonsofstandardcoalDuringthe14thSeethelastpagefordisclaimerPage11of25TablePageHeaderFlatGlass06865HKFive-YearPlanperiodrenewableenergywillaccountformorethan50oftheincrementinprimaryenergyconsumption2RenewableenergypowergenerationtargetsBy2025renewableenergygenerationwillreach1raroundaMt3h3gtrillioniRkWheDuringlbaTthe14thFive-YearPlanperiodtheincreaseinpowergenerationfromrenewableenergywillaccountformorethan50oftheincreaseinelectricityconsumptioninthewholesocietyandpowergenerationfromwindpowerandsolarenergywillbedoubled3RenewableenergypowerconsumptiontargetBy2025theweightingproportionofconsumptionoftotalrenewableenergypowerinthecountrywillreachabout33andtheweightingofnon-hydropowerconsumptionofrenewableenergypowerwillreachabout18andtheutilizationrateofrenewableenergywillremainatareasonablelevel4Renewableenergynon-electricityutilizationtargetBy2025thescaleofnon-electricityutilizationsuchasgeothermalenergyheatingbiomass21December2022heatingbiomassfuelandsolarthermalutilizationwillreachtheequivalentofmorethan60milliontonsofstandardcoalTheplanhasestablishedthestatusofwindpowerandsolarenergyasthemainbodyofrenewableenergydevelopmentfrom2021to2025ItisexpectedthatwindpowerandsolarenergywillenterintorapiddevelopmentwiththeissuanceofthisdevelopmentplanTheStateCouncilofChinaissuedanoticeregardingthecarbonpeakingactionplanbefore2030Themainobjectivesofthisnoticeincludeby2025theproportionofnon-fossilenergyconsumptionwillreachabout20energyconsumptionperunitofGDPwilldecreaseby135comparedwith2020andcarbondioxideemissionsperunitofGDPwilldecreaseby18comparedwith2020layingasolidfoundationforachievingcarbonpeakingby2030theproportionofnon-fossilenergyconsumptionwillreachabout25carbondioxideemissionsperunitofGDPwilldropbymorethan2ra65MtcomparedhgiRwithe2005lbaTandthegoalofcarbonpeakingby2030willbesuccessfullyachievedWiththe25non-fossilfuelconsumptiontargetinplaceweexpectthatcumulativeinstalledpowercapacityofwindpowerandsolarpowerinaggregateinChinaby2030istoexceed2700GWimplyingthattotalinstalledwindsolarcapacitywillincreasenearly5-foldfromthe535GWrecordedin2020duringthe10-yearperiodOfthenearly2200GWofnewinstallationsbetween2021and2030approximately23willbecontributedbysolarenergyimplyingthatnolessthan100GWperyearofsolarcapacitywillbeaddedintheChinamarketduringthe10-yearperiodUnderourbasecasescenarioforecastweestimatethatannualnewinstallationsofsolarwindinthe14thFive-YearPlanperiod2021-2025willbe104GW65GWandsolarwindannualnewinstallationsinthe15thFiveYearPlanperiod2026-2030willbe180GW88GWSeveralnationshaveissuedfavorablepoliciestoenhancelong-termcertaintyonthedevelopmentofthenewenergyindustryandprovidednewimpetustothecontinueddevelopmentofthesolarindustryInApril2020theFrench06865HKgovernments2030NationalEnergyandClimatePlansubmittedtotheEuropeanCommissionstatedthatitwillcontinuetoincreasetheproportionofrenewableenergypowergenerationBy2030renewablepowergenerationinFrancewillaccountfor特玻璃40ofitselectricitysupplyofwhichwindpowerwillaccountfor20InJuly2020theEuropeanCommissionlaunchedtheEU莱福energysystemintegrationdevelopmentstrategyestablishedindustryalliancesinvariousnewenergyfieldsandpromotedthedevelopmentofrelatedfieldsthroughinter-industrycollaborationInthelong-termbudgetoftheNextGenerationEUrecoveryplantheEUrequiresmemberstatestoallocateatleast37ofpublicspendingtocombatclimatechangeandfurtherrelaxFlatGlassfinancialconstraintsonrenewableresourcesMeanwhilethenewGermancoalitionhashighlightedthecrucialimportanceofsolarenergyintheenergytransitionofGermanythebiggestsolarmarketinEuropeThenewgovernmentcoalitionagreementhasraisedthetargetoftotalinstalledsolarcapacityby2030setoutinRenewableEnergyAct2021to215GWwhichisinlinewithenergyindependenceandsecurityconcernsasresultoftheconflictinUkraineWitharound606GWoftotalinstalledsolarcapacityattheendof2021Germanyistargetedtogrowitssolarpowerportfoliobyalmost4-foldbytheendof2030InFebruary2021shortlyafterPresidentBidensinaugurationtheUnitedStatesofficiallyannounceditsreturntotheParisClimateAgreementandadvancedprojectsoncleanelectricityelectrificationsubsidiessolarandclimate-friendlytechnologydevelopmentandcleanenergyequipmentmanufacturingMoreoverBrazilsNationalEnergyAgencypredictsthatby2035totalinvestmentinBrazilspowerindustrywillexceedUS30billionofwhich70willbeusedforrenewableresourcetechnologiessuchaswindenergysolarpowerbiomassenergyandoceanenergyReportCompanySeethelastpagefordisclaimerPage12of25TablePageHeaderFlatGlass06865HKTable-4Primaryenergyconsumptionandshareofrenewableenergies201920201raMt2025EhgiRel2030EbaTTotalprimaryenergyconsumption100milliontonsofstandard487498666851coalProportionofnon-fossilenergy153159200250Totalnon-fossilenergyconsumption100milliontonsofstandard745792133213coalStandardcoalconsumptionforelectricitysupplygkWh30693055290280Totalnon-fossilenergyconsumption100millionkWh2427925919459617594321December2022Proportionofelectricitygenerationinconsumption985996999985Non-fossilenergypowergeneration100millionkWh23917258164591174823Hydropower100millionkWh13019135521596620146TotalinstalledcapacityGW358370420530Utilizationhour3726382738003800AnnualnewlyinstalledcapacityGWaverage121022Nuclearpower100millionkWh3487366257278299TotalinstalledcapacityGW495077111Utilizationhour73947453740074502raMthgiRelbaTAnnualnewlyinstalledcapacityGWaverage167Biomass100millionkWh1111132629735994TotalinstalledcapacityGWGW233059118Utilizationhour5507509450805100AnnualnewlyinstalledcapacityGWaverage7612Windpower100millionkWh405746651273721977TotalinstalledcapacityGW2102826071047Utilizationhour2082209721002100Annualnewlyinstalledcapacityaverage716588Solarpower100millionkWh22432611850818408TotalinstalledcapacityGW205253773167306865HKUtilizationhour1169116011001100AnnualnewlyinstalledcapacityGWaverage49104180特玻璃SourceCECNEAGuotaiJunanInternationalestimates莱福TheMinistryofIndustryandInformationTechnologyissuedthenoticeonImplementationMeasureforCapacityReplacementintheCementandGlassIndustryThesaidmeasure水泥玻璃行业产能置换实施办法的通知wasissuedinFlatGlassJuly2021anditclarifiedthatnewphotovoltaicglassprojectsnolongerrequirecapacityreplacementbutacapacityriskearlywarningmechanismmustbeestablishedUnderthecurrentbackgroundofachievingcarbonpeakingandcarbonneutralityconsideringthedevelopmentneedsofthephotovoltaicindustryandglassproductioncapacityitisexpectedthatthedemandforphotovoltaicglassallthewayto2025willstillberisingatadoubledigitpercentageYoYgrowthrateInordertohelpensurethedevelopmentofsolarenergyandpromotetheadjustmentofdomesticenergystructurethemeasureimplementedadifferentiatedpolicyonthereplacementofphotovoltaicglasscapacityNewphotovoltaicglassprojectsnolongerrequirecapacityreplacementbutacapacityriskearlywarningmechanismmustbeestablishedProvincial-levelindustryandinformationtechnologyauthoritieswillentrustnationalindustryorganizationsorintermediaryagenciestoholdhearingstodemonstratethenecessityofprojectconstructiontechnologicaladvancementenergyconsumptionlevelenvironmentalprotectionleveletcandtoannouncetheprojectinformationAftertheprojectiscompletedandputintoproductiontheprojectownerhastofulfillthepromisenottoproducearchitecturalglassThispolicyisexpectedtoleadtoasurgeinnewentrantsintothesolarglassindustryasthekeybarriertoentrythecapacityreplacementrequirementhasbrokendownHowevertoreducetherisksofovercapacityinthesolarindustrywiththerapidsurgeinnewentrantscapacitieshearingswillbeconductedheldbytheindustryassociationtodeterminethenecessityandoverallcompetitivenessofthenewsolarglassprojectsApprovalandReportpermissionwillneedtobesecuredfromtheindustryassociationbeforeprojectconstructionbeginsorbeforenewcapacitiescanbecommissionedTheriskofovercapacityinthesolarindustryiscontrollablewiththesetupofthismechanismCompanySeethelastpagefordisclaimerPage13of25TablePageHeaderFlatGlass06865HKCOMPANYOVERVIEW1raMthgiRelbaTCompanyprofileafastgrowingsolarglassindustrygiantaimingtoquicklyrampupitscapacityFoundedinJune1998FlatGlassGroupisthe2ndlargestsolarglassmanufacturerinChinawith12200tonsofsolarglasscapacityattheendof2021Estimatedtohaveadomesticsolarglassmarketshareof223intheendof2022FlatGlassismainlyengagedinthemanufacturingandsalesofvariousglassproductsincludingPViephotovoltaicsolarglassfloatglassarchitecturalglassandhouseholdglassTheproductionfacilitiesoftheCompanyarestrategicallylocatedinJiaxing21December2022ZhejiangProvinceFengyangCountyAnhuiProvinceandHaiphongVietnamTheCompanymainlysellsitsglassproductstocustomersincountriesincludingChinaVietnamSingaporeKoreaMalaysiaIndiaMexicoandUnitedStatesThePVglassproductsaremainlyusedtoproducePVcellswhichcanthenbeassembledtoformPVmodulesThePVglasscanalsobeusedascoversforthinfilmPVcellsTheCompanycompletedthefirstphaseofAnhuicapacityexpansionschemebyadding3productionlines3000tonsperdaybetween2017and2019andmaintained5400tonsperdayofsolarglassmeltingcapacityattheendof2019withatotalof8operatingfurnacesTheCompanyadded2000tonsofdailymeltingcapacity2furnacesinHaiphongVietnambetween2020and2021aspartofitsoffshoreexpansionstrategyDuetoitsaggressiveexpansionstrategytheCompanyhasbroughtitsproductioncapacityto12220tonsperdayattheendof2021whichwentupYoYby906FlatGlassaimstofurtheraddmorethan8000tonsinnewproductioncapacityin2022withmoretocomein2023onwardsAtotalof2raMthgiRelbaTapproximately18000tonsofsolarcapacityisprojectedtobeaddedfrom2022to2024withatotalcapitalexpenditureofroughlyRMB150bnWeexpectthetotalsolarglassmeltingcapacityoftheCompanytoincreaseto30200tonsperdaybytheendof2024asaresultofthecapacityexpansionTheimplicationisthattheexistingsolarglassproductioncapacityispoisedtoincreaseataCAGRof353from2021to2024furthersolidifyingtheCompanysleadershippositionwithinthesolarglassindustryinChinaTheCompanymayovertakeitsclosestpeerXinyiSolarasthelargestsolarglassproducerinChinaby2024intermsofproductioncapacityAttheendofJune2022MrRuanHongliangandhisfamilyheld522ofshareholdinginFlatGlassandisthelargestshareholderoftheCompanyFigure-17ShareholdingstructureofFlatGlassGroup06865HKRuanHongliangFamilyManagementStaff68Others410522特玻璃莱福FlatGlassFlatGlassGroupSourcetheCompanyGuotaiJunanInternationalNoteasattheendofJune2022CompetitiveadvantagesofFlatGlassFlatGlassishighlyrecognizedinthePVglassindustryinChinaTheCompanywasrecognizedasaleaderinthePVglassindustryinChinaasitwasthefirstPVglassmanufacturerinChinatohaveobtainedtheSPFcertificationsforPVglassInadditiontheCompanyparticipatedinsettingindustrystandardsofPVglassmanufacturingThePVglassproductsofFlatGlasshavealsobeenrecognizedinChinaforsuperiorqualityandwereusedinseveraliconicstructuresincludingthePVprojectsoftheChinaPavilionofthe2010ShanghaiWorldExpoandtheNationalStadiumtheBirdsNestintheBeijingOlympicsInReportrecognitionofitsleadingpositionandexpertiseinPVglassmanufacturingtheCompanyreceivednumerousawardsinChinaincludingtheNationalKeyNewProductAwardrenderedbyMinistryofScienceandTechnologyofChinaWiththecontinuousresearchanddevelopmenteffortstheCompanyhasdevelopedacoatingagentin-houseforitsPVglasstoenhanceitslightCompanytransmissionratewhichsettheCompanysPVglassproductsapartfromthoseofitscompetitorsWhenthecoatingagentisSeethelastpagefordisclaimerPage14of25TablePageHeaderFlatGlass06865HKappliedthelighttransmissionrateofthePVglasscouldincreasebetween20and30ascomparedtoregularPVglasswithoutsuchcoatingThelaboratorytestingresultconductedbyanindependenttesting1centrerahasMtshownhgithatRthee32mmlbaTcoatedPVglassofFlatGlasshasalighttransmissionrateofupto945ascomparedto918beforetheapplicationofthecoatingagentTheresearchanddevelopmentcapabilityhasbeeninstrumentaltothesuccessoftheCompanyTable-5KeymilestonesandthedevelopmentofFlatGlassGroupYearMilestonesJune1998NaibangTradingthepredecessorofFlatGlasswasestablishedandengagedinthesalesofglassproductsNovember2000Expandedthebusinesstoincludeprocessingofglassproductssuchassilvermirrors21December2022October2002CommencedtheproductionoftemperedglassJune2006EnteredintothePVglassindustryOctober2006BecameoneofthedesignatedsuppliersofhouseholdglassproductsofalargemultinationalfurnitureretailerAugust2007ZhejiangJiafuthethenindirectlywhollyownedsubsidiarywasestablishedinabidtofurtherexpandthescaleofproductionofPVglassJune2009ThePVglassproductionofFlatGlasswasfurtherincreasedas2furnacesattheproductionfacilitiesofZhejiangJiafueachwithadailymaximumproductioncapacityof300tonswerecompletedandputintooperationJuly2010DailymeltingcapacityforPVglassexceeded1290tonsuponcompletionoftheconstructionoftheglassprocessingfacilitiesphaseIIofZhejiangJiafuOctober2011Firstfloatglassmeltingfurnacewithadailymaximumproductioncapacityof600tonswasputintooperation2raMthgiRelbaTMay2012First600tonsPVglassfurnacecommencedoperationAugust2012AnhuiFlatMaterialsobtainedtheextractionrighttoaminingassetthroughopenbidOctober2012FirstLow-Eglassprocessinglinewascompletedwithanannualprocessingcapacityof58millionsqmandcommercialproductioncommencedinlate2012December2012The2ndfloatglassfurnacewasputintooperationanddailyproductioncapacityoffloatglasswasincreasedto1200tonsMay2013The2ndPVglassfurnacewithadailycapacityof600tonswasputintooperationincreasingtheCompanysdailycapacityofPVglassto2290tonsbyNovember2013October2014IntroducedafullsetofinternationallyleadingfullyautomaticandcontinuousglassprocessingsystemNovember2015CompletedtheIPOH-SharelistinginHongKongraisingapproximatelyHK885mninnetproceedsDecember2018DailymeltingcapacityofPVglassamountedto4290tonsfollowingthecommissionof2productionlinesinAnhuiProvinceFebruary2019CompletedtheA-SharelistinginShanghaiStockExchangeraisingapproximatelyRMB255mninnetproceedsDecember2019DailymeltingcapacityofPVglassamountedto5400tonsfollowingthecompletionofFirstPhaseAnhuiExpansion06865HKJune2021DailymeltingcapacityofPVglassamountedto9800tonswiththesuccessfulcompletionofVietnamexpansionandthecommissionoftwo1200-tonproductionlinesfromSecondPhaseAnhuiExpansionDecember2021DailymeltingcapacityofPVglassreached12200tonsattheendoftheyear特玻璃November2022DailymeltingcapacityofPVglassfurtherclimbedtomorethan19000tonsattheendofNovember莱福SourcetheCompanyGuotaiJunanInternationalRDisvitaltothesuccessofFlatGlassandthuswillbefurtherstrengthenedthroughincreasedinvestmentTheFlatGlassefficiencyoftheelectricitygeneratedbysolarmodulesdependsonthequalityofthePVglassHenceloweringtheironcontentandimprovingthelighttransmissionrateofthePVglassamongotherthingsareimportantaspectsofcontinuedresearchanddevelopmentFlatGlassplanstodevotemoreresourcestoresearchanddevelopmentbycontinuingtoimproveproductiontechnologiesinparticulartechnologiesrelatingtotheanti-reflectivecoatingforPVglasstoincreaselighttransmissionrateandtheLow-EglasscoatingandtodevelopnewproductssuchasPVglasswiththicknessunder20mmFurthermoretheCompanyintendstoimprovethequalityofitsPVglassbyfurtherreducingtherateofdefectiveglassintheproductionprocessandithascollaboratedwithuniversitiesandresearchanddevelopmentcentersinChinatoimprovethemanufacturingprocessandthequalityofitsglassproductswhilereducingproductioncostandimprovingitsoperatingefficiencyRDexpensesrepresent47oftheCompanysrevenuein2021201942202045Thethin-glassproductssalesmixhasbeenontheriseinrecentyearsInaccordancewiththeindustrydevelopmenttrendthe20mmthinglassproductisexpectedtooutsellthe32mmproductfrom2023onwardsCommissionoflargefurnacesandtheacquisitionofsilicasandminingassetsareallsettostrengthencostcompetitivenessSince2017allthenewlylaunchedproductionlinesofFlatGlasshaveascaleof1000tpdoraboveReportapproximately20lessinproductioncostcomparedtothe600tonproductionlineFurthermoretheCompanyofficiallyenteredintothebig-furnaceerawiththesuccessfulcommissionoffour1200tonproductionlinesinAnhuiProvincein2021whichhasevenbetterproductionefficiencythanthe1000tonproductionlineBytheendof2021approximately803ofthetotalsolarCompanyglassproductioncapacitiesoftheCompanyarefromfurnaceswithscaleof1000tonsoraboveBetween2017and2021theSeethelastpagefordisclaimerPage15of25TablePageHeaderFlatGlass06865HKCompanyaddednearly10000tpdofsolarglassproductioncapacityThecostcompetitivenessofFlatGlassisfurtherstrengthenedwithallthelargefurnacesithasputintooperationsince2017Mostrecently1ratheMCompanythgicompletedRelbtheaTacquisitionofseveralminingassetsieDahuaSanliandasilicasandminingrightinFengyangin2022inabidtoincreaseitsselfsupplysilicasandinthenextfewyearsFollowingtherecentacquisitiononDahuaandSanlitheannualproductionofquartzsandincreasedsubstantiallyfrom900000tonsto75milliontonsTheFengyangminingrightsacquiredwilladdanother5milliontonsofannualproductionofquartzsandTheseacquisitionswillhelpreducerawmaterialprocurementcostofFlatGlassgoingforwardItsimportanttonotethatthecostsolarglassproducedbyFlatGlassisapproximatelyRMB2-3sqmlesscomparedtotheonesproducedbyitstier-2peersintheindustry21December2022UnitcostofsolarglassproducedbyFlatGlassdroppedbetween2018and2020achievingamongthelowestproductioncostinthesolarglassindustryThankstothelaunchoflargesolarglassfurnacessince2017theCompanymanagedtobringdownitsproductioncostfromRMB183sqmin2017toRMB161RMB160RMB156in2018-2020respectivelyThespikeintheproductioncostin2021wasmainlyduetotheriseintherawmaterialscostandenergycostduringtheperiodHoweverwiththehighoperatingefficiencyachievedbythelargerandmoretechnologicaladvancedfurnacestheincreaseintheself-supplysilicasandaswellastheincreaseinthesalesmixofthin-glassproductstheunitproductioncostofFlatGlassisexpectedtograduallyfallfrom2022to2024TheCompanyandXinyiSolararetier-1solarglassplayersandhaveachievedthelowestproductioncostsintheindustryseeFigure-19andweexpecttheoverallcompetitivenessofFlatGlasswillbefurtherstrengthenedwiththecontinuedlaunchofitsstate-of-theart1200tonproductionlines2scheduledraMthforg2023iRande2024lbaTandwiththeincreaseintheproportionofitsself-supplysilicasandFigure-18HistoricalsolarglassASPandcostofFlatGlassFigure-19GrossmarginofFlatGlassselectedpeersASPsqmCostsqmFlatGlassXinyiSolarIricoLuoyang600320294500286283269261270400238222216300RMBRMB22020219918818320006865HK173173161160162170156152148100特玻璃莱12000福20152016201720182019202020212022E2023E2024E20152016201720182019202020211H2022SourcetheCompanyGuotaiJunanInternationalNoteASPisVATexcludedSourcetheCompanyGuotaiJunanInternationalFlatGlassFigure-20Coststructureofsolarglass1200tonfurnaceFigure-21Glasscostbreakdown1200tonfurnace181611616053210206463214Rawmaterials12Fuelenergy1088Electricity8LaboursqmRMB548286Others6420ReportRawmaterialsEnergyElectricityLabourOthersTotalSourcesolarglasspublichearingsinformationGuotaiJunanInternationalestimatesSourcesolarglasspublichearingsinformationGuotaiJunanInternationalestimatesCompanySeethelastpagefordisclaimerPage16of25TablePageHeaderFlatGlass06865HKFigure-22KeyproductsofFlatGlassGroup1raMthgiRelbaTFlatGlassGroupArchitecturalMineralproductsPVglassFloatglassHouseholdglass21December2022glassandothersSourcetheCompanyGuotaiJunanInternationalBusinessmodel-PVglassisthekeygrowthdriverAsidefromPVglasstheCompanyoffersavarietyofglassproductsmadefromfloatglasstothemarketInadditiontoPVglasswhichismainlyprocessedfromPVrawglassmanufacturedin-housetheCompanyalsomanufacturesandsellsfloat2raMthgiRelbaTglasshouseholdglassandarchitecturalglassFloatglassisbothaproductthatwasdirectlysoldtocertaincustomersandatypeofrawglassthatwasusedtoproducehouseholdglassandarchitecturalglassTomaintainacost-efficientoperatingstructuretheCompanyhasadoptedaverticallyintegratedbusinessmodelthatgivesitmorecontroloveritsproductionTheverticalintegrationcommencesfromtheproductionofrawglasscomprisingPVrawglassandfloatglasswhichissubsequentlyprocessedintoPVglasshouseholdglassandarchitecturalglassproductsseeFigure-10MeanwhileFlatGlassobtainedtheminingrightstotheMineinAnhuiProvincein2012tominequartziteorewhichcanbeprocessedintosilicasand-oneofthemajorrawmaterialsitusesfortheproductionoffloatglassQuartziteoreextractedfromthemineissubjecttorefinementbyexternalpartiesintosilicasandwhichtheCompanyhasprioritytopurchasesuchsilicasandfortheproductionofglassproductsTheCompanyfurtheracquiredseveralminingassetsinthelasttwoyearswhichissettofurtherincreaseitsself-supplysilicasandTheimportanceofPVglasswillcontinuetoriseovertimeamidtheriseofglobalinvestmentonsolarenergyThe06865HKCompanystartedproductionandsalesofPVglassin2006anditsPVglassproductsaremainlyultra-clearpatternedPVglassesmainlytobeusedinthemanufacturingofcrystallinesiliconPVcellswhicharethenassembledtoformPVmodules特玻璃PVglassgenerallyhasahighleveloflighttransmittanceduetoitspatternonthesurfaceandlow-ironcontentThepatternon莱福thesurfaceofPVglassdecreasesthelightreflectionandincreasesthelightrefractionandthereforepermitsmorelighttopenetratethroughtheglassThePVglassoftheCompanyhasatleast915lighttransmissionratethroughtheglasswithoutcoatingandatleast935lighttransmissionratewithcoatingFlatGlassmanufacturesPVglassproductsforitscustomersinFlatGlassaccordancewiththeirrespectiverequirementssuchassurfacequalitydimensionlighttransmissionrateandstrengthThePVglassistemperedtogivedesiredmechanicalstrengthtotheglasstowithstandadverseweatherconditionsandnormalwear-and-tearThekeyrawmaterialstheCompanyusesintheproductionofitsPVglassmainlyincludeultra-clearsilicasandsodaashalsoknownassodiumcarbonatelimestoneanddolomiteTheCompanygenerallysellsitsPVglassproductstoPVmodulemanufacturersinChinaandoverseasPVglasssalesaccountedfor817and886oftheCompanystotalrevenuesin2021and1H2022respectivelyTheimportanceofPVglasswillcontinuetoincreasewiththerapidlyrisingglobalinvestmentonsolarenergyReportCompanySeethelastpagefordisclaimerPage17of25TablePageHeaderFlatGlass06865HKFigure-23BusinessmodelofFlatGlassGroup1raMthgiRelbaT21December20222raMthgiRelbaTSourcetheCompanyGuotaiJunanInternationalTable-6MajorproductsunderdifferentproducttypesTypeofProductMajorProductsMainTypeofCustomersPVglass-Ultra-clearpatternedPVglassDomesticandoverseasPVmodulemanufacturersFloatglass-FloatglassDomesticandoverseasglassprocessingcompaniesanddomesticglasswholesalersHouseholdglass-MirrorproductstemperedglassforDomesticandoverseasfurnituremanufacturersandprocessing06865HKcabinetdoorsandshelvesothertypescompaniesmultinationalfurnitureretailersofglassforhouseholduseArchitecturalglass-TemperedglassinsulatedglassDomesticandoverseasarchitecturalcontractorsdomestic特玻璃莱Low-Eglasslaminatedglassandtheirarchitecturalglassprocessingcompaniesandconstruction福compositeglassproductscompaniesSourcetheCompanyGuotaiJunanInternationalFigure-24UltrawhitePVglassFigure-25FloatglassFlatGlassReportSourcetheCompanyGuotaiJunanInternationalSourcetheCompanyGuotaiJunanInternationalCompanySeethelastpagefordisclaimerPage18of25TablePageHeaderFlatGlass06865HKFigure-26Low-EarchitecturalglassFigure-27Householdglass1raMthgiRelbaT21December2022SourcetheCompanyGuotaiJunanInternationalSourcetheCompanyGuotaiJunanInternational2raMthgiRelbaT1-9M2022operatingresultsreviewOperatingresultsin1-9M2022wereinlinewithexpectationandquarterlynetearningsin3Q2022wentup100YoYDuringthefirst9monthsof2022revenueofFlatGlasssurged770YoYtoRMB11215mnandnetprofittoshareholderswasdown124YoYtoRMB1504mnGrossmarginandnetmargininthefirst9monthsreached221and134downYoYby165pptand137pptrespectivelyQuarterlyrevenuein3Q2022wasup693YoYtoRMB3910mnandnetearningswasup100YoYtoRMB501mnGrossmarginin3Q2022dropped77pptto210andnetmarginwentdownYoYby69pptto128Thesharpdeclineinconsolidatedgrossmargininthefirst3quartersof2022aswellasthe3rdquarterof2022wasmainlyduetotheYoYfallinthesolarglasssellingpriceandanincreaseinenergycostsmainlyduetoconflictinUkrainethatpushedupthegaspricein2022comparedtothesameperiodof2021Althoughadeclineinthenetprofitistobeexpectedfor2022earningsgrowthwilltakeplaceinboth2023and2024amidastablePVglasssellingpricestablegrossmarginand06865HKstrongerproductshipmentsbroughtbythecapacityexpansionFigure-28PVglassproductioncapacityforecastFlatGlassFigure-29PVglasssalesvolumeforecastFlatGlass特玻璃莱福350001000000943871302009000003000078296825400800000FlatGlass25000700000589024194006000002000050000015000TonTonDay12200400000ThousandsqmThousand26476110000300000640018492354002000001576235000100000--2019202020212022E2023E2024E2019202020212022E2023E2024ESourcetheCompanyGuotaiJunanInternationalSourcetheCompanyGuotaiJunanInternationalReportCompanySeethelastpagefordisclaimerPage19of25TablePageHeaderFlatGlass06865HKEARNINGSFORECASTS1raMthgiRelbaTWeestimatethetotalrevenueofFlatGlassGrouptogrowataCAGRof343from2021to2024reachingRMB21098mnin2024Duetostrongsolarglassshipmentsexpectedin2022broughtbyaggressivecapacityexpansiontotalrevenueofFlatGlasswillincrease692YoYtoapproximatelyRMB1474bnin2022andtofurtherclimbtoRMB1805billion224YoYin2023andtoRMB211billionin2024169YoYUnderanormalsolarglasssellingpriceexpectedduringtheforecastperiodconsolidatedgrossmarginin2022-2024isestimatedtobe250257263respectivelyDetailed21December2022segmentalforecastsareasfollowsSolarglassbusinessDuetothecapacityexpansionweforecastsolarglassproductioncapacitytobe19400tpd25400tpd30200tpdin2022-2024respectivelyThesolarglasssalesvolumeissettoincreasefrom264761thousandsqmin2021to589024thousandsqm782968thousandsqm943871thousandsqmfrom2022to2024respectivelyTheproportionofthin-glasssalesisestimatedtobe405255in2022-2024respectivelyWeestimateblendedsolarglassASPpersqmex-VATfrom2022-2024tobeRMB216RMB203RMB199respectivelyAssuchsolarglassrevenueisprojectedtogrow786246184toRMB127bnRMB159bnRMB188bnin2022-2024respectivelyWeforecastsolarglassrevenueCAGRfrom2021to2024tobeapproximately381Solarglassrevenueistomakeup863879890ofthetotalrevenueofFlatGlassfrom2022-2024respectivelyWeforecastgrossmarginofsolarglasstobe250251256from2raMthgiRelbaT2022to2024respectivelyWebelievethattheindustrywillenterintothestageoffullcompetitionandlowprofitabilitywillbecomeanewnormalandgrowthwillmainlybedrivenbysurgingsolarglasssalesvolumeNon-PVglassbusinessNon-PVglassbusinessmainlyconsistsofsalesfromfloatglasshouseholdglassarchitecturalglassminingproductsandothersNon-PVglassbusinessrecordedanaggregateofRMB159bninsalesin2021upYoYby538Weexpecttherevenuefromnon-PVglassbusinesstogrowataCAGRof135from2021to2024reachingRMB233bnattheendof2024Non-PVglassbusinesswillmakeup137121110oftheCompanystotalrevenuefrom2022-2024respectivelyThegrossmarginfromnon-PVglassbusinessreached346in2021andweexpectthegrossmarginfrom2022-2024tobe251302316respectivelyOperatingprofitistoincreaseataCAGRof168from2021to2024reachingRMB3937mnin2024Theoperatingprofit06865HKoftheCompanygrewataCAGRof399from2012to2021andreachedRMB2471mnin2021withanoperatingmarginof284WeexpecttheoperatingprofitoftheCompanytogrowataCAGRof168tohitRMB3937mnin2024amidstable特玻璃grossmarginandmoderategrowthinoperatingexpensesduringthe3-yearforecastperiodOperatingprofitfrom2022-2024is莱estimatedtobeRMB2664mnRMB3295mnRMB3937mnwithrespectiveoperatingmarginof181183187福MeanwhileweexpecttheEBITDAofFlatGlassfrom2022to2024tobeRMB4040mnRMB4843mnRMB5833mnrespectivelywithrespectiveEBITDAmarginof274268276FlatGlassWeestimateFlatGlasssshareholdersnetprofitfrom2022-2024tobeRMB2047mnRMB2515mnRMB3042mnrespectivelyimplyingYoYgrowthof-34229209Assolarglasssellingpriceisprojectedtoremainstablefrom2023onwardsasaresultofcontinuedriseintheglasssupplyinthemarkettheprofitabilityoftheCompanyissettoreturntoanormallevelseenintheperiodbetween2017and2019Assolarglassgrossmarginisprojectedtobenomorethan30in2023and2024thegrowthofFlatGlassbothrevenueandearningsismainlytocomefromtheexpectedsurgeinsolarglassshipmentOurEPSestimatesfrom2022-2024areRMB0953RMB1172RMB1417respectivelyReportCompanySeethelastpagefordisclaimerPage20of25