Core views:

Incident: The company recently announced its 2024 interim results announcement. 2024H1's revenue was HK$12.687 billion, +4.5% year over year; net profit of HK$1.963 billion, +41.0% year over year; and an interim dividend of 10 HK cents per share, with a payout ratio of 45.4%.

The photovoltaic glass business volume is rising rapidly, and the company's production capacity planning is progressing as scheduled. The company's PV glass segment 24H1 revenue was HK$11.09 billion, +4.84% YoY, with a gross profit margin of 21.49%, +6.25pct YoY. According to data from the 24H1 Company Performance Conference, 3200 tons of new daily melting capacity reached 0.029 million tons in the first half of the year; assuming that 2.0mm glass accounted for 80% of the shipment structure, the estimated 24H1 sales volume was 0.64 billion square meters, +21.0% year over year, with a single flat revenue of 15.8 yuan, -14.2% year over year; the estimated 24H1 single flat cost was 12.4 yuan, compared to -20.6% year on year, mainly due to reduced soda ash and natural gas prices and the company's scale effect; 24H2 The company plans to add 2 additional 1000t/d production lines in Anhui and 1 additional 1200t/d production line in Malaysia.

At the bottom of the boom, the industry concentrated on cooling down, medium term expansion or policy restrictions, and the company's cost advantage plus overseas layout remained in the leading position.

Power plant development has become more cautious, and profitability has declined. According to the company's financial report, the company's solar power generation business 2024H1 revenue was HK$1.548 billion, +3.85% year over year, gross profit margin 65.54%, and -4.89pct year on year. During the reporting period, the company added 300 MW of grid-connected capacity. As of 24H1, the company had approved a grid-connected scale of 6244 MW, and construction progress was relatively slow.

Profit forecast and investment advice: We expect the company's 2024-2026 EPS to be 0.44/0.62/ 0.70 HKD/share, respectively, and PE valuations to be 7.94/5.67/ 5.00 times, respectively. Referring to comparable company valuations and the company's medium- to long-term growth, the company will be given a 2024 PE of 10x and a reasonable value of HK$4.43 per share, maintaining a “buy” rating.

Risk warning: Low expectations for PV installations, sharp expansion in industry supply, and rising raw fuel prices.