Brief performance review

On August 19, 2024, the company disclosed its semi-annual report. In the first half of the year, revenue was 3.55 billion yuan, a year-on-year decrease of 4.4%; net profit to mother was 0.27 billion yuan, an increase of 5.2% over the previous year. Among them, Q2 achieved revenue of 1.77 billion yuan, a year-on-year decrease of 2.0%, and realized net profit of 0.1 billion yuan to mother, a year-on-year decrease of 39.8%.

Management analysis

Overseas demand continues to be released, and Malaysian Jinjing's profit has increased both: the company's Malaysian subsidiary mainly produces thin-film module glass for First Solar, benefiting from the continued release of demand for photovoltaics manufactured in the US and improvements in raw material costs. In the first half of the year, Malaysia Jinjing Technology achieved operating income of 0.286 billion yuan, an increase of 8.6% year on year; achieved net profit of 0.039 billion yuan, an increase of 53.2% year on year.

Affected by the drop in soda ash prices, gross margin declined sequentially in the second quarter: the company achieved a gross profit margin of 18.2% in the second quarter, down about 3.8 pct from the first quarter. We judge that the decline in gross margin in the second quarter was mainly affected by the decline in soda ash prices. The cumulative production of soda ash in the first half of the year was 18.87 million tons, an increase of 19.3% over the previous year, but the growth rate of downstream demand slowed down, and soda ash prices showed a downward trend.

Poor demand for real estate led to a drop in float glass prices, and joint venture losses increased: the company achieved investment profit and loss of -0.071 billion yuan in the first half of the year, and the loss amount increased by about 0.047 billion yuan year-on-year, mainly affected by the increase in losses of the joint venture Jinjing Saint-Gobain in the first half of the year. Jinjing Saint-Gobain's main business is float glass as a building material. The company's shareholding ratio is 50%. In the first half of the year, due to the decline in domestic real estate completion area, demand for float glass cooled down, and prices continued to drop. As industry profits fall, the cold repair phenomenon is expected to increase markedly in the second half of the year, which is expected to drive the industry's supply and demand back to normal levels.

The TCO production line upgrade was completed, and attention was paid to the introduction progress of overseas customers: in the first half of the year, the company completed the upgrading of the TCO Jinjing TCO coating production line in Tengzhou, and gradually improved product quality to ensure the quality of TCO coating substrates. The company actively promotes business progress with overseas customers and cooperates with foreign thin-film photovoltaic companies in early product verification and introduction work. If subsequent negotiations and verification with overseas customers go smoothly, it is expected to bring new performance increases.

Profit Forecasts, Valuations, and Ratings

According to the company's semi-annual report and our latest judgment on the industry, the 2024-2026 net profit forecast of 0.51, 0.61, and 0.76 billion yuan remained unchanged, corresponding to PE of 15, 13, and 10 times, maintaining the “buy” rating.

Risk warning

Product prices fell short of expectations; raw material prices rose above expectations; new business expansion fell short of expectations.