Event: The company released its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 10.764 billion yuan, +1.39% year-on-year; net profit to mother of 0.928 billion yuan, +4.95% year-on-year; net profit after deducting non-attributable net profit of 0.899 billion yuan, +9.2% year-on-year.

Photovoltaic film shipments and revenue both increased, and global production capacity expansion helped lead the market. In the first half of 2024, the company shipped 1.389 billion square meters of photovoltaic film, +43.61% year-on-year, with revenue of 9.879 billion yuan, or +3.79% year-on-year. As a leading global photovoltaic film company, with significant advantages in technology, cost control and customer resources, 24H1 achieved an increase in global market share and stable profits.

The company has a wide range of adhesive film products and provides a full range of packaging materials, which can cover the diverse needs of new technologies such as TopCon, HJT, 0BB, XBC, thin-film batteries, and perovskite modules. The company's overseas photovoltaic film production capacity bucked the trend and gradually released photovoltaic film production capacity in 2024. At the same time, construction of the second phase of the production expansion project at the Thai base was launched to help maintain the leading global pattern.

The performance of photosensitive dry film increased significantly, and the entire industry chain layout helped the electronic materials business take off. In the first half of 2024, the company shipped 0.074 billion square meters of photosensitive dry film, +35.83% year-on-year, with revenue of 0.275 billion yuan, or +26.92% year-on-year. Since 2016, the company has focused on research on PCB core electronic chemical materials. After an 8-year industrialization development cycle, it has achieved many outstanding achievements such as self-supply of raw materials, dual base layout in East China and South China, construction of a global segmentation base, R & D and sales core team training, and the introduction and supply of leading global PCB companies. The company has established a strong customer resource barrier. The products are suitable for acid corrosion, alkali corrosion and m-SAP processes, covering product requirements such as soft boards, hard and soft boards, high multi-layer, HDI, etc., and upgraded to carrier board applications such as BGA and PKG around the high-end demand for AI and other chips.

The aluminum-plastic film business is growing strongly, and differentiated products drive market expansion. In the first half of 2024, the company shipped 5.606 million square meters of aluminum-plastic film, +35.54% year-on-year, with revenue of 0.059 billion yuan, or +26.52% year-on-year. The company's aluminum-plastic film products have gone through early production capacity investment and customer verification, and have now begun to enter the sales volume stage, and have successfully been introduced to some power battery customers such as Ganfeng Electronics and Nandu Power. RO support membranes continue to develop differentiated products, receive recognition from downstream customers and form batch sales. The company continues to make efforts in industrial applications such as water treatment, while continuously improving the production equipment independently developed by the company, improving various aspects of formulation, process and equipment, and continuously improving the product performance of the support film.

Profit forecast: Affected by the continued decline in PV module prices, although the company still has a strong advantage in terms of film market share, film shipping prices continue to be under pressure. As a result, we lowered the company's profit forecast for 2024-2026. The adjusted net profit forecast for the company was 2.4/3/3.5 billion yuan, and the corresponding PE was 15.5x/12.1x/10.4x, respectively, maintaining the “gain” rating.

Risk warning: PV installations fall short of expectations; industry competition intensifies; raw material prices fluctuate greatly.