Core views

The company released its 2024 semi-annual report. The company's revenue for the first half of the year was 16.213 billion yuan, or -53.5% compared to the mother, -3.06 billion yuan, -167.5% year-on-year, minus -3.489 billion yuan, or -191.6% year-on-year. Declining prices in the industrial chain put pressure on companies' profits, and depreciation dragged down the company's performance.

By business, the silicon wafer business shipped 62 GW in the first half of the year, an increase of 18.3% over the previous year, leading the industry by 3.3 cents/W in total costs. Due to falling prices in the industrial chain, the company's battery module business profits are under pressure. Furthermore, the performance of the company's shareholding company Maxeon declined sharply. Follow up on the progress of the company's Saudi production capacity construction.

occurrences

The company released its 2024 semi-annual report

In the first half of the year, the company's revenue was 16.213 billion yuan, or -3.06 billion yuan, or -167.5% year-on-year, net of -3.489 billion yuan, or -191.6% year-on-year. Looking at a single quarter, Q2's revenue was 6.281 billion yuan, -63.7% YoY, -36.8%; return to mother -2.184 billion yuan, -195.6% YoY, -133.9% month-on-month; after deducting -2.45 billion yuan, -254.2% YoY and -136.0% YoY.

Brief review

Declining prices in the industrial chain put pressure on companies' profits, and depreciation dragged down the company's performance. Due to falling prices in the PV industry chain in the second quarter, the company's profitability was under pressure. At the same time, the company accrued asset depreciation of 0.61 billion yuan in the second quarter, mainly due to inventory depreciation losses.

By business, the silicon wafer business shipped 62 GW in the first half of the year, an increase of 18.3% over the previous year. The company's total market share of silicon wafers is 23.5%, leading the industry by 3.3 points/W in total cost. The company's market share of N-type and large-size exports has increased, with large export sales accounting for 61% and N-type export market share 42%. The company's N-type products lead the industry in production efficiency. N-type products achieve a single monthly production lead of about 12.3%, and the number of sheets produced per kilogram led the industry by about 1.15 tablets. In terms of production capacity, by the end of June '24, the company's production capacity had increased to 190 GW.

The market price decline cycle in the photovoltaic industry puts pressure on the profits of the battery module business. During the reporting period, the company's module 4.0 mainstream products were two or more levels ahead of competitors in terms of power and efficiency of more than 0.2%. At the same time, the company accelerated the construction of an intellectual property library for component products; in terms of production capacity, by the end of June '24, the production capacity of high-efficiency tiled modules reached 22 GW.

Participating company Maxeon's performance declined sharply due to the rapid decline in PV product prices in Europe and the US, adjustments in PV subsidy policies, and high interest rates. Meanwhile, the progress of Maxeon's 3GW battery module expansion project in North America fell behind expectations. The public shareholding company Maxeon confirmed an investment profit and loss of about -0.24 billion yuan in the first half of the year.

Follow the progress of the company's Saudi production capacity construction. The company plans to build a 20GW joint venture plant in Saudi Arabia, which will mainly supply the Middle East, North Africa, Europe and other possible high-end markets. The overall sales price is expected to have a certain premium compared to domestic expectations, and subsequent plant launches are expected to contribute to increased performance.

Profit forecast: The company's net profit for 2024-2026 is expected to be 5.04/1.31/1.88 billion yuan, and the 2025-2026 PE valuation corresponding to August 23, 2024 is 22.9/15.9 times. Industrial chain prices continued to decline due to overcapacity in the industry in 2024, putting pressure on the company's performance. It is expected that next year, the industry's production capacity will gradually be cleared, and industrial chain prices may gradually recover. The company's profitability as a leader in the industry is expected to recover and maintain an “gain” rating.

Risk analysis

1. The risk that industry demand falls short of expectations. The company's business is mainly in photovoltaic silicon wafers. If the industry's growth rate falls short of expectations, it will put some pressure on the company's profit per watt of silicon wafers.

2. The company faces a certain risk of loss due to Maxeon's loss of performance and falling stock prices. As a subsidiary of the company listed on the US stock market, Maxeon's performance has continued to lose money over the past few years, and its stock price has continued to fall, which may have a negative impact on the company's performance.

3. The risk of increased pressure on cash flow. Currently, the vast majority of companies in the silicon wafer industry are losing cash. The company currently has long-term loans of 36.3 billion yuan. If the industry continues to be at the bottom of the cycle, the company may face a certain amount of cash pressure.