The results of the second quarter improved significantly: in the first half of the year, the company realized income / return net profit / deducted non-home net profit of 27.8 million yuan, 12.9%, + 17.9%, 48.1%, 17.5%, 17.5%, of which the second-quarter income / return net profit / deduction of non-return net profit was 13.5 million, 1.16 trillion, month-on-month-5.2%, 834% and 734%, which was higher than our expectation. Gross profit margin rose 1.7 percentage points to 11.5% month-on-month due to lower costs, as well as a sharp increase in government subsidies, which contributed to a significant improvement in second-quarter results.
Under unfavorable conditions, the gross profit margin is still higher than the same period last year, and the gap between the company and the leader continues to narrow: in the first half of the year, the company's photovoltaic glass revenue was 2.64 billion yuan, year-on-year + 23%, sales volume 148 million square meters, year-on-year + 53%, production and sales rate 96%. Under the unfavorable conditions that the average price of the main product 2mm glass market fell 12% year-on-year and the raw fuel price rose, the gross profit margin was 1.9% to 11.2% compared with the same period last year. It is the only enterprise that has disclosed a year-on-year increase in the gross profit margin of photovoltaic glass in the first half of the year, and is the highest among second-and third-tier enterprises, and the gap between gross profit margin and first-tier enterprises has continued to narrow to 4-9 percentage points from 11 percentage points in the second half of last year.
Under the limitation of industry expansion, the company has a significant advantage in obtaining capacity indicators: under the capacity early warning mechanism, it is significantly more difficult to obtain the proposed capacity indicators in the photovoltaic glass industry, but with the advantages of central enterprises, the company's proposed capacity of 3600 tons in Qinhuangdao, 2400 tons in Zigong and 1200 tons in Zhangzhou have all been approved recently, of which only companies in Hebei and Sichuan have been approved, laying a solid foundation for increasing market share. The company's Yixing 650t production line was ignited in May and currently has a total capacity of 5300 tons. through self-construction and acquisition, we expect to increase to 9220,12570max 15340t by the end of 2023-24-25.
Glass prices continue to rebound, and the gross profit margin will rise sharply in the second half of the year: according to Zhuochuang, the price of photovoltaic glass rose 0.5 yuan per square meter in August and is expected to continue to rise 1.5-2 yuan per square meter in September. Driven by rising selling prices and falling raw material prices, we expect the company's photovoltaic glass gross profit margin to rise to 15% in the second half of the year. Due to its own cost reduction and improved supply and demand, it will further increase to 15.8% and 17.6% the year after next.
Repeat buying: we raise our annual profit forecast for 2023-24-25 by 8%, 11%, 7%. In view of the falling valuation of the photovoltaic sector, the target price was lowered from HK $8.85 to HK $7.84, based on a price-to-earnings ratio of 6.5 times forecast 2024 (compared with an average discount of 40 per cent for the two first-tier companies). We believe that the logic of the gradual narrowing of the cost gap between the company and the first-tier enterprises has been verified, and the rise in volume and profit will promote rapid performance growth and reaffirm buying as our preferred stock in the photovoltaic glass sector.