Incident: The company released its 2024 semi-annual report. 2024H1 achieved operating income of 6.374 billion yuan, a year-on-year decrease of 32.35%, and realized net profit to mother of -0.166 billion yuan, a year-on-year decrease of 117.41%; 2024Q2 achieved operating income of 2.66 billion yuan, a year-on-year decrease of 51.23%, and realized net profit to mother of -0.186 billion yuan, a year-on-year decrease of 130.94%.

N-type battery shipments remain the highest in the world, and increased competition in the industry has put phased pressure on profits.

2024H1 shipped 19.21 GW of battery products (+68.51% year over year), ranking second in the world. Among them, N-type batteries shipped 16.43 GW (+150.46% year over year), maintaining the number one shipment volume in the world; however, against the backdrop of increased competition in the industry, battery product prices continued to decline. Affected by this, the company's battery business achieved operating income of 6.355 billion yuan, a decrease of 32.46% year on year, and gross margin decreased 16.00 pcts to 0.77% year on year.

The production capacity structure has been steadily optimized, and breakthroughs have been achieved in overseas market shipments and production capacity.

The company took the lead in completing asset impairment preparations for P-type battery equipment at the end of 2023. By the end of 2024H1, the company's production capacity structure was all next-generation N-type high-efficiency battery production capacity (about 40 GW), maintaining industry leadership in terms of production capacity scale and technology. The company is actively developing overseas markets. In terms of shipping, the share of overseas sales increased from 4.69% in 2023 to 13.79% in 2024H1, and has good profitability (gross margin of overseas business is 1.67%, gross margin of domestic business is 0.92%); in terms of capacity construction, the company plans to invest in building an annual production capacity of 5GW high-efficiency N-type batteries in Oman, which is scheduled to be completed and put into operation in 2025.

Continued emphasis is placed on R&D investment, and N-type battery technology remains industry-leading.

Although 2024H1's R&D investment decreased by 25.50% year-on-year to 0.111 billion yuan, its share of revenue increased by 0.16 pct to 1.74%. 2024H1 continues to optimize and upgrade N-type battery process technology, and released a new generation of N-type battery “MonO 2” series products to upgrade various indicators such as battery passivation performance and double-sided ratio (double sided ratio reached 90%, battery product conversion efficiency exceeded 26.3%); the conversion efficiency of pilot BC batteries can be increased by 1 to 1.5 pcts compared to mainstream N-type batteries, and the laboratory efficiency of pre-developed perovskite laminated batteries can reach 29.03%.

Maintaining a “buy” rating: Against the backdrop of rapid falling prices in the industrial chain and intensifying competition in the battery sector, the company's profit is under heavy pressure. As a prudent measure, we lowered the company's profit forecast. The company is expected to achieve net profit to mother of 0.48/0.841/1.332 billion yuan in 24-26 years (148% down/ 38% reduction/22% reduction). The company's overseas production capacity construction is progressing steadily, and technology research and development continues to break through. It is expected to maintain its dominant position in the N-type TopCon field for a long time and maintain a “buy” rating.

Risk warning: Global PV installations, company capacity expansion, and product sales fall short of expectations. The price war in the PV industry chain is intense, the speed of technology iteration exceeds expectations, and the technical advantages of specialized companies are gradually weakening.