On January 9, Fuyao Glass issued an announcement stating that the Board of Directors passed a resolution on January 8, 2021. The company intends to issue additional shares and place no more than 101,126,240 H shares to qualified investors in accordance with the "Articles of Association". Shares, accounting for 20% of the total number of issued H shares of the company on the day of the board meeting.
The proceeds from the issuance will all be used to supplement working capital, repay interest-bearing debt, invest in research and development projects, optimize the company's capital structure, expand the photovoltaic glass market, and general corporate purposes.
According to the recent estimate of HK$51.5 per share of Fuyao Glass Hong Kong, the amount of funds raised this time can reach HK$4.1 billion, which is not small, and of course it has caused a sensation in the industry. Compared to other glass giants, Fuyao Glass has a better position and influence in the industry.
About Fuyao Glass
Fuyao Group was established in 1987 and is a large multinational group focusing on automotive safety glass and industrial technical glass. It was listed on the Main Board of the Shanghai Stock Exchange in 1993 (A-share code: 600660), and in 2015 (H-share code: 3606) on the Hong Kong Stock Exchange, forming an "A+H" model that spans both domestic and foreign capital platforms.
After more than 30 years of development, Fuyao Glass has established R&D centers and factories in many places around the world. It is also the largest auto glass manufacturer in China. Its main production process is float glass, with a market share of over 65%, which is well deserved The glass giant.
According to data, Fuyao Glass has maintained a certain increase in revenue from 2015 to 2019, from 13.6 billion to 21.1 billion in 2019, and its total assets have reached 38.83 billion. Its customers have covered large domestic and overseas markets. Some auto companies are also one of the few auto parts suppliers with a dominant position in my country, and their strength is evident.
However, although Fuyao Glass is already a giant in the glass industry, its business does not involve photovoltaic glass. Even the founder of the company, Mr. Dewang Cao, said in public that he is not optimistic about the photovoltaic glass market and believes that its competition is too fierce.
OFweek Solar Photovoltaic believes that Mr. Cao Dewang’s statement did not point out that Fuyao Glass will not enter the core of the photovoltaic glass industry.
Fuyao Glass is able to stand out among many domestic and foreign auto glass manufacturers. From an obscure small company to today's giant company, Fuyao Glass will certainly not be afraid of fierce competition, not to mention Fuyao Glass has sufficient capital and talent advantages. Even if there is no first-mover advantage, it can quickly enter the photovoltaic industry supply chain with its R&D and global sales system.
Therefore, Mr. Cao Dewang’s statement is not valid. What is the reason that Fuyao Glass has been disinterested in photovoltaic glass before?
Fuyao Glass Performance Growth Bottleneck
Over the past two decades, my country’s auto industry has developed rapidly, not only surpassing the United States to become the world’s largest single auto market, but also driving the development of auto ancillary enterprises. Fuyao Glass is one of the leaders with overwhelming orders and high profits. , So that Fuyao Glass has always had a good performance.
On the other hand, the photovoltaic industry relies on subsidies to achieve its present situation. What's more, in the past few years, the price of photovoltaic glass has been on a downward trend, and the profit margin is not high. There are also two oligarchs, Xinyi Solar and Flat, which control more than 60% of the market share. Naturally, Fuyao Glass has no intention of entering this market segment.
In 2018, my country's auto sales began to show negative growth, which means that the world's major auto markets have entered a downward path, plus the impact of the epidemic in 2020. Fuyao Glass's performance has also declined.
According to the 2019 financial report of Fuyao Glass, during the reporting period, the company's consolidated operating income was RMB 21,103,877,500, an increase of 4.35% over the same period of the previous year; the total profit realized was RMB 3,231,138,100, a decrease of 34.89 over the same period of the previous year. %, the net profit attributable to shareholders of the listed company was RMB 2,898,433,300, a decrease of 29.66% from the same period last year; earnings per share were RMB 1.16, a decrease of 29.27% from the same period last year.
In the third quarter financial report of 2020, during the reporting period, the company's consolidated operating income was RMB 13,776,355,600, a decrease of 11.88% over the same period of the previous year; total profit realized was RMB 2,045.9792 million, a decrease of 27.76% from the same period of the previous year. It can be seen that Fuyao Glass's revenue level has experienced a greater decline.
Looking back at the photovoltaic glass faucets in the same period. Xinyi Solar reported the first half of 2020. During the reporting period, the Group achieved a consolidated income of HK$4622.9 million, an increase of 15.7% from the first half of 2019. The profit attributable to equity holders of the Company increased by 47.6% to HK$1406.5 million. Basic earnings per share for the first half of 2020 was HK$17.39, compared to HK$12.07 for the first half of 2019.
Flatter's 2020 financial forecast. According to preliminary calculations by the financial department, it is estimated that the net profit attributable to shareholders of listed companies will be 1.5 billion to 1.66 billion yuan in 2020, which will increase by 783 million yuan to 9.43 compared with the same period of the previous year. Billion yuan, an increase of 109.20% to 131.52%.
In addition, the revenue of other photovoltaic glass suppliers also increased to a certain extent. The main reason is that the price increase caused by the shortage of photovoltaic glass has more than doubled at one time, and even many module companies can't get the goods with money. Of course, the revenue of photovoltaic glass companies has also increased significantly.
In addition, Almaden and Flatter won a huge long-term contract in the second half of 2020, and the estimated amount even exceeded the company's total assets. As module companies expand production one after another, I believe that huge long-term contracts for photovoltaic glass will continue to appear in 2021.
Entering photovoltaic glass under double benefits
Of course, as an automotive glass giant, Fuyao Glass will not enter the market rashly because of the temporary rise of photovoltaic glass, but mainly sees bright expectations.
The leaders of China and the United States successively vowed to vigorously support the development of renewable energy, and photovoltaics, which has the fastest decline in cost, must be the focus.
Second, with regard to the photovoltaic glass capacity replacement policy, the Ministry of Industry and Information Technology publicly solicited opinions on the "Implementation Measures for Capacity Replacement in the Cement Glass Industry (Revised Draft)" and clearly pointed out that photovoltaic rolled glass and automotive glass projects may not formulate capacity replacement plans. Although the main craft of Fuyao Glass is float glass, it belongs to the automotive glass project. In other words, Fuyao Glass's entry into photovoltaic glass does not need to be restricted by capacity replacement.
These two points are the main factors for Fuyao Glass to raise funds to enter photovoltaic glass. With the support of 4.1 billion Hong Kong dollars, it will definitely set off a huge wave in the photovoltaic glass market. At that time, the photovoltaic glass market controlled by Xinyi Solar and Flat will also usher in new changes.
Posted by Cindy Wong | Findy Solar
Findy Solar has been a custom solar solution provider and high efficiency solar panel manufacturer in China since 2006. Types of solar panels: crystalline silicon solar panel, back contact solar panel, amorphous silicon solar panel.