Everbright Securities: Policy signals reverse expectations and focus on the photovoltaic glass, float glass, cement and carbon fiber industries

The Zhitong Finance App learned that Everbright Securities released a research report saying that on the afternoon of July 2, sectors such as steel, coal, and building materials registered the highest gains. The sharp rise on July 2. From a fundamental level, the “anti-domestic roll” policy determination has positive expectations and guiding significance for industries where competition at low prices is serious, such as the real estate chain and new energy. By sector, the agency believes that the industry with the worst internal volume and the worst profit situation in the industry is more likely to take the lead in supply-side reforms. Among them, the photovoltaic industry chain is the most representative. The entire industry chain is seriously surplus, and losses in all links are quite common. Focus on the photovoltaic glass, float glass, cement and carbon fiber industries.

The main views of Everbright Securities are as follows:

Incident: According to Xinhua News Agency, Beijing, July 1, Xi Jinping, General Secretary of the CPC Central Committee, State President, Chairman of the Central Military Commission, and Director of the Central Committee on Finance and Economics, presided over the 6th meeting of the Central Committee on Finance and Economics on the morning of July 1 to study issues such as deepening the construction of a unified national market and high-quality development of the marine economy. The conference emphasized that to further promote the construction of a unified national market, it is necessary to focus on key difficulties, control low price and disorderly competition among enterprises according to law and regulations, guide enterprises to improve product quality, and push for an orderly exit from backward production capacity. On the afternoon of July 2, sectors such as steel, coal, and building materials registered the highest gains.

Comment: Policy signals reverse expectations, focusing on the areas with the worst internal volume and the worst profitability

The sharp rise on July 2, from the level of market transactions, was a reallocation of capital, from a sector with high popularity in the early stages to a cyclical sector with a high level of capital; from a fundamental level, the “anti-internal volume” policy determination had positive expectations and guiding significance for industrial sectors where competition at low prices is serious, such as the real estate chain and new energy. It is expected that the next possible evolution process is: after clarifying the policy attitude, state ministries and departments and various localities introduced a series of supply-side clearance policies in the corresponding fields; supply and demand patterns were reversed; the supply and demand pattern was reversed, and product prices recovered, corporate profit recovery.

Currently, we are still in the initial process of clarifying policy determination. Each subsequent step still needs to be confirmed by tracking facts and data, and investors will participate in stages according to the expected increase in certainty. By sector, Everbright Securities believes that the industry with the worst internal volume and the worst profit situation in the industry is more likely to take the lead in supply-side reforms. Among them, the photovoltaic industry chain is the most representative. The entire industry chain is seriously overcrowded, and losses in all links are quite common.

Focus on the photovoltaic glass, float glass, cement and carbon fiber industries

In the field related to building materials, the current profit situation is ranked as follows: carbon fiber (large losses in the entire industry); photovoltaic glass (loss in the entire industry); float glass (large losses in the industry, marginal profit for leading companies); cement (losses for some companies); and glass fiber (few companies lose money, most companies profit). Considering that the overall output value of the carbon fiber industry is relatively low (about 5 billion yuan) and the economic benefits of supply-side reforms are relatively limited, the priority for implementing supply-side reforms may be relatively low.

Photovoltaic glass: As of June 26, the price of photovoltaic glass was between 10.5-12 yuan/square meter for 2.0mm single plating (panel) (delivery price including tax); in actual transactions, there were many discussions in the market, and major downstream manufacturers had obvious price advantages; the price of photovoltaic glass reached a record low, about 0.5-1 yuan/square meter below the historical low price. According to research by Longzhong News, the latest average net profit of the national photovoltaic glass industry is -362 yuan per ton. Compared with the period when the industry began to cut production last year, the industry's net profit at the end of the month began to cool down at the stage of -438 yuan/ton. As profits continued to decline in the later stages, the pace of production cuts accelerated.

Float glass: Current price and profit According to Zhuochuang information data, most of the gross profit of glass production lines is still in loss, and the profits of some production lines have improved slightly, and the northern thermal coal fuel production line remains profitable; pipeline gas fuel glass production cost this week is 1290.81 yuan/ton, and the gross profit loss is 91.18 yuan/ton; North China thermal coal has a production cost of 1013.56 yuan/ton for fuel glass this week, with a gross profit loss of 84.44 yuan/ton; Hubei petroleum coke fuel glass production cost this week is 1139.91 yuan/ton, with a gross profit loss of 133.11 yuan/ton.

Cement: In '24 and 25Q1, many companies were in a state of loss (mostly in the North, which has a certain relationship with the cold weather and sluggish demand in the north), and some local enterprises were marginally profitable.

Carbon fiber: As of June 27, the average gross profit per ton of the carbon fiber industry was -8,543 yuan. It has been almost two years since the industry's gross profit turned negative.

Risk analysis: The pace of policy promotion fell short of expectations, demand recovery fell short of expectations, and exports declined beyond expectations, leading to an intensification of internal developments.