Zhongtong Finance App learned that Guosen Securities released a research report stating that it maintains Xinyi Solar (00968) with an 'outperform the market' rating and considers that competition and profit decline in the photovoltaic component sector and cash flow are being pressured by glass companies. Based on prudent principles, the company's profit forecast is lowered. It is expected that the net profit attributable to the parent company from 2024 to 2026 will be 3.63/3.55/4.59 billion yuan (previously forecasted 4.38/5.12/6 billion yuan), with a year-on-year growth rate of -4%/-2%/+29% (previously forecasted 15%/17%/17%), and diluted EPS will be 0.41/0.40/0.52 yuan.

Guosen Securities' main points are as follows:

The company achieved a net income attributable to the parent company of 1.79 billion yuan in 2024H1, a year-on-year increase of 41%.

The company achieved a revenue of 11.67 billion yuan in 2024H1, a year-on-year increase of 5%; a net profit attributable to the parent company of 1.79 billion yuan, a year-on-year increase of 41%. In terms of business, the photovoltaic glass achieved an operating income of 10.12 billion yuan in 2024H1, a year-on-year increase of 4%; the gross margin was 22%, an increase of 6 percentage points; and the photovoltaic power station operation achieved an operating income of 1.41 billion yuan, a year-on-year increase of 3%; the gross margin was 66%, a decrease of 5 percentage points.

The profitability of photovoltaic glass has improved, and capacity expansion is steadily progressing.

The company's photovoltaic glass achieved a revenue of 10.12 billion yuan in 2024H1, a year-on-year increase of 4%; the gross margin was 22%, an increase of 6 percentage points. At the end of 2023, the company's daily melting capacity of photovoltaic glass was 0.0258 million tons, and the company added 3,200 tons of capacity in 2024H1. As of the end of 2024H1, the company's daily melting capacity of photovoltaic glass reached 0.029 million tons. Assuming that 80% of the shipment of 2.0mm glass in the industry is photovoltaic glass, it is estimated that the company's photovoltaic glass sales volume in 2024H1 will be 0.61 billion square meters, a year-on-year increase of 11%; the comprehensive ex-tax unit selling price is 16.5 yuan, and the unit gross profit is 3.6 yuan, an increase of 0.9 yuan year-on-year. Due to the decline in the purchase prices of soda ash and Henry Hub natural gas, the profit has improved year-on-year, but due to intensified competition in components and continuous decline in component prices, the price of photovoltaic glass has declined and profit margins have been squeezed.

Assuming that 80% of the shipment of 2.0mm glass in the industry is photovoltaic glass, the price of photovoltaic glass has fallen from its high point of 17.5 yuan/unit (April) to 15.5 yuan/unit (July), a decrease of 2 yuan/unit according to the bank's calculations; the gross profit of the head enterprises is approximately 2.9-3.0 yuan/unit in July. Currently, the profitability of the photovoltaic glass sector is at a low level, the threshold for investment entry and exit is high, the industry's capacity regulation is increasing, and middle and lower-tier enterprises are facing losses. It is expected that the future industry concentration will increase. The company is expected to add 3,200 tons/day of melting capacity for photovoltaic glass in 2024H2, and it is expected that the daily melting capacity of photovoltaic glass will reach 0.0322 million tons by the end of 2024.

The profitability of the power generation business has declined, and the construction of power stations has slowed down.

The company's photovoltaic power station operation achieved an operating income of 1.41 billion yuan in 2024H1, a year-on-year increase of 3%; the gross margin was 66%, a decrease of 5 percentage points. The company's weighted average on-grid electricity price was approximately 0.57 yuan/kWh in 2024H1, a year-on-year decrease of 0.02 yuan/kWh. Affected by power restrictions and market-oriented transactions, the company's profitability in the power generation business has declined. As of the end of 2023, the company's equity installed capacity was 4.11GW, and the controlling installed capacity was 5.94GW. The company added a controlling installed capacity of 0.3GW in 2024H1, and the controlling installed capacity reached 6.24GW with the commencement of operation by the end of June 2024 (The company directly holds 2.35GW and indirectly holds 3.90GW through Xinyi Energy, including 5.84GW of centralized projects). The speed of power station construction has slowed down. The bank expects that the company will add photovoltaic controlling installed capacity of 0.3GW, 0.6GW, and 0.6GW in 2024-2026, respectively. The controlling installed capacity of photovoltaic power plants will reach 6.2GW, 6.8GW, and 7.3GW by the end of 2024-2026.