Description of the event

CITIC released its 2024 semi-annual report. 2024H1 achieved revenue of 3.376 billion yuan, a year-on-year increase of 75.73%; of these, 2024Q2 achieved revenue of 1.562 billion yuan, a year-on-year increase of 135.86%; among them, achieved revenue of 1.562 billion yuan, a year-on-year increase of 41.26%, a year-on-year decrease of 13.9%; and a net profit of 0.077 billion yuan, a year-on-year increase of 49.78%.

Incident comments

24H1 tracking stent placement, and gross margin increased year-on-year. 24H1 revenue increased significantly year-on-year, mainly due to an increase in the operating rate of photovoltaic power plants in the Middle East, India and other markets, which led to an explosion in tracking bracket deliveries. Tracking/fixed brackets were delivered at 5.89/2.08 GW respectively, +264%/-42% over the same period last year. Benefiting from product structure optimization, the comprehensive gross profit margin of the 24H1 stent business was 19.75%, up 3.35pct year-on-year, and the gross margin of tracking/fixed stents was 20.57%/14.15%, respectively.

Other financial indicators, the cost rate for the 24H1 period was 9.36%, down 1.09pct from the previous year. Expense control capabilities continued to improve, and it is expected to remain below 9% throughout the year. 24H1 credit impairment losses were -0.063 billion yuan, and asset impairment losses were -0.025 billion yuan, which increased as the scale of the business expanded. 24H1 net profit margin was 6.85%, an increase of 1.87pct over the previous year, thanks to improvements in gross margin and period expense ratio. The contract debt at the end of Q2 was 0.554 billion yuan, an increase of 57% over the previous month; inventory was 2.612 billion yuan, an increase of 65% over the previous month. It is expected to be due to an increase in goods shipped and inventory due to tight shipping capacity, and is expected to be settled in Q3.

Looking ahead, the company has plenty of orders in hand, and the trend of quantitative profit is improving. In terms of volume, the company's on-hand orders at the end of Q2 were 6.669 billion yuan, an increase of about 183% over the previous year, accounting for 83% of on-hand orders, a sharp increase of 22 pcts over the previous year. Looking at the subregion, Middle East Africa and East Asia India accounted for 42% and 40% of the tracking bracket respectively. The company benefited from the explosion of overseas demand from non-European and American countries, supporting the acceleration of revenue growth throughout the year. Advantageously, the logic of increasing demand for terrestrial power plants+tracking penetration continues to be implemented. The gross margin of tracking brackets is expected to remain around 20%, and there is no shortage of room for further improvement.

The company is expected to achieve net profit of 0.69 and 0.96 billion in 2024-2025, corresponding to PE of 17 or 13 times, maintaining a “buy” rating.

Risk warning

1. Deterioration of the competitive landscape;

2. PV installation falls short of expectations.