Incident: The company released its 24-year semi-annual report. During the reporting period, net profit to mother, and net profit without return to mother were 1.224, 0.122, and 0.117 billion, respectively, -6.4%, -42.01%, and -40.05%, respectively. Of these, 24Q2 realized revenue, net profit to mother, and net profit without return to mother were 0.643, 0.071, and 0.071 billion, respectively, -8.74%, -44.82%, and -41.38%, respectively. %, +57.44%

Repricing and structural adjustment go hand in hand, giving full play to the advantages of “small but beautiful”. The repricing, which began on March 25, landed well in Q2. The average price of thick yarn in Q2 was 4,171 yuan/ton, -8.49% and +13.43%, respectively.

On the one hand, the repricing led to an increase in the company's rough yarn shipping price. On the other hand, the products also followed the trend and transmitted the cost pressure brought about by the reprice of thick yarn, and the company's performance improved dramatically from month to month. 24H1's sales volume of glass fiber products was basically the same year on year, but the 6.4% revenue drop in the first half of the year was significantly less than the 15.25% year-on-year decline in the average price of thick yarn during the same period. We expect that, on the one hand, the company has a high share of the market for products such as short-cut felt and wet thin felt, and the shipping price is more stable. On the other hand, the company actively adjusts the product structure when the price of thick yarn is at the bottom. The share of glass fiber products in the shipment volume is expected to increase further.

Increased exchange losses drive up financial expenses, and performance resilience is better after excluding the impact. The 24H1 company's financial expenses were +35.5987 million yuan year on year, and the financial expense ratio was +2.76 pcts year over year. In a situation where interest income accounted for a significant increase, the sharp increase in financial expenses was mainly due to a sharp increase in exchange losses. From 23H1's profit of 32.0991 million to 24H1's loss of 11.8156 million, excluding the impact of exchange fluctuations, the company's 24H1 net profit without return to mother could reach 0.16 billion yuan, -17.46% year over year, the decline was far less At a thick yarn company.

The capital expenditure for the new production line is nearing its end, and we are waiting for the scale to rise again. By the end of June '24, the first 0.15 million-ton production line of the first phase of the company's 0.6 million-ton high-performance fiberglass intelligent manufacturing base project had been completed 90%. It is expected that the capital expenditure will soon be started and put into operation, and 24H2's production capacity may rise to the next level.

Profit forecast and investment rating: Considering the impact of exchange losses on financial expenses, and considering the impact of the time the new line was put into operation on annual sales, we lowered our profit forecast. The company's 24-26 revenue is 2.795, 4.059, and 4.782 billion, respectively, +7.23%, +45.21%, and +17.81%, respectively, and net profit to mother is 0.261, 0.41, and 0.564 billion, respectively, corresponding to -11.91%, +57.32%, and +37.55%, respectively. PE is 14.51, 9.22, and 6.71, respectively. Considering the company's outstanding competitive advantages in the glass fiber business, leading the industry in terms of profit level and stability, the scale and structure drive future growth, and maintain a “highly recommended” rating.

Risk warning: industry supply has increased beyond expectations; downstream demand falls short of expectations; production expansion is slower than the industry;