The company released its 2024 semi-annual report. Revenue for the first half of the year increased 1.39% year on year to 10.764 billion yuan, net profit to mother increased 4.95% year on year to 0.928 billion yuan, and after deducting non-net profit, increased 9.20% year on year to 0.899 billion yuan.

At present, the company still maintains a good level of profit, strictly controls accounts during the downturn in the photovoltaic industry, and has more solid statements.

In addition, the company's photosensitive dry film business is expected to enter a period of rapid development, and the aluminum-plastic film business is also expanding.

A brief analysis of the semi-annual report. The company released its 2024 semi-annual report. Revenue for the first half of the year increased 1.39% year on year to 10.764 billion yuan, net profit to mother increased 4.95% year on year to 0.928 billion yuan, and net profit after deducting non-return to mother increased 9.20% year on year to 0.899 billion yuan. The company's revenue for the second quarter was 5.442 billion yuan, up -4.57% year on year and 2.27% month on month; net profit to mother was 0.407 billion yuan, down 21.79% year on month and 21.97% month on month, mainly due to the total amount of 0.235 billion yuan in credit impairment and asset impairment provisions calculated in the first half of the year (0.259 billion yuan in Q2).

Q2 The gross margin has increased, and the cost ratio has also increased. The company's comprehensive gross profit margin for the first half of 2024 was 16.68%, up 2.07 percentage points year on year. Among them, Q2 gross profit margin was 18.05%, up 1.44 percentage points year on year and 2.78 percentage points month on month. The company's sales, management, and financial expense ratios for the second quarter were 0.43%, 1.35%, and 0.27%, respectively, up 0.22, 0.12, and 0.29 percentage points, respectively, up 0.08 percentage points, 0.16 percentage points, and 0.80 percentage points from month to month. The overall cost ratio increased 1.04 percentage points from month to month.

The reports are more solid. The company's preparations for the downturn in the industry are clearly shown in the report: a) Inventory fell to 2.56 billion yuan at the end of the second quarter (inventory at the end of 2023 was 3.09 billion yuan, of which 0.938 billion yuan was issued, and inventory in the first quarter of 2024 was 2.673 billion yuan), mainly due to the fact that the amount of goods issued fell to 0.684 billion yuan, and the account period control was more strict; b) The net cash flow from the company's operating activities in the semi-annual report was 0.905 billion yuan Yuan is the highest value in nearly 10 years (the second highest was 0.229 billion yuan in the 2020 semi-annual report), which also shows that the company is under strict account control; c) Leverage was reduced, and Q2 debt repayment expenses were 0.535 billion yuan. Currently, the company's balance ratio is 26.69%, of which interest-bearing debt is around 0.9 billion yuan (mainly short-term loans). In the first half of the year, the company still had large-scale capital expenditure (the cash payment for fixed assets, intangible assets, and other long-term assets was 0.216 billion, annualized or the highest capital expenditure cash outflow in nearly ten years), but the company's leverage fell to 1.39 at the end of the second quarter, falling for three consecutive quarters. The main reason for this situation in the statement is that the company is still maintaining a good level of profit combined with stricter account control. The ability to adjust the account period during the downturn is also a reflection of the company's position in the industry. Overall, the company is more strict in terms of accounting periods, and the quality of reports is becoming more solid. This is particularly difficult during the downturn in the industry.

By business situation. In terms of adhesive film, shipments in the first half of the year were 1.389 billion square meters (a year-on-year increase of about 44%), with a single flat revenue of about 7.11 yuan. The company's annual target for the adhesive film business is 2.6-2.8 billion square meters. Overseas, the company's overseas production capacity is expected to account for 20% in 2025. In terms of backplanes, the company's PV backpanel product shipment ranking in 2023 rose to second place in the world. In the first half of 2024, backboard sales were 67.7815 million square meters, down 18.26% year on year, revenue 0.415 billion yuan, 414.7899 million yuan, down 43.53% year on year, and single flat revenue was about 6.12 yuan. In terms of photosensitive dry film, sales in the first half of the year were 73.6651 million square meters, up 35.83% year on year, and revenue was 0.275 billion yuan, up 26.92% year on year. Currently, the company's customers cover most well-known companies in the industry, and the electronic materials business is expected to enter a period of rapid development. In terms of functional films, aluminum-plastic film sales in the first half of the year were 5.606 million square meters, up 35.54% year on year, and revenue was 58.9 million yuan, up 26.52% year on year.

The company's aluminum-plastic film products have gone through early capacity investment and customer verification, and have now begun to enter the sales volume stage. In the future, with the expansion of production capacity and customer expansion, it is expected that the industry ranking will be further improved.

Profit forecast and investment advice: The company's net profit due to mother in 2024-2025 is estimated to be 2.306 billion yuan and 2.917 billion yuan, respectively, corresponding to 16 times and 13 times the valuation, maintaining a “highly recommended” rating

Risk warning: Global PV installations are lower than expected, and changes in raw material prices have intensified.