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 7.912, 0.811, and 0.759 billion, respectively, +14.92%, +25.35%, and +35.23%, respectively. Of these, 24Q2 achieved revenue, net profit to mother, and net profit without return to mother were 4.055, 0.369, and 0.344 billion, respectively, compared with the same period.

The float 24H1 boom is declining, and supply and demand are still looking for a new balance. The average price of 24H1 float flat glass nationwide was -3.95%. At the same time, industry inventories continued to accumulate since the beginning of the year, and the economy was under pressure, but the cost side of soda ash and fuel prices also declined significantly year on year, and corporate profits benefited. Looking at 24H1, the company's float glass sector achieved revenue of 3.711 billion yuan, -10.03% year over year. In terms of split, sales volume, unit price, and unit cost were 48.82 million yuan per heavy box, 76.01 yuan/heavy box, and 54.45 yuan/heavy case, with unit price ratio of -9.07% -1.05% Since Q3, float glass prices have remained in a downward channel due to declining demand. It is expected that subsequent cold repairs will dynamically adjust supply to help the industry reach a new balance.

The contribution of photovoltaic glass has increased significantly, and gross margin is comparable to that of leading first-line players. As of the end of 24H1, the company's photovoltaic glass production capacity was 10,600 t/d, and the production capacity under construction was 2,400 t/d, ranking among the top three in the industry. 24H1 achieved sales of 184.95 million square meters of photovoltaic glass, with revenue of 2.901 billion yuan, accounting for 36.67% of revenue, a significant increase of 14.92 percentage points over the full year of '23. 24 The company's gross margin of photovoltaic glass reached 21.24%. As a new entrant, the scale advantage continues to increase with production and sales growth, and the gross margin level is comparable to that of leading enterprises in the industry. 24H1 Zhaotong PV's 1,200 t/d photovoltaic glass production line and Sabah Malaysia's 1,200 t/d photovoltaic glass production line were built one after another. The increase in 24H2 photovoltaic glass volume is expected to continue, but the price side is still expected to experience some downward pressure due to the imbalance between supply and demand.

A number of measures have continued to promote cost savings, and cost advantages have been further consolidated. The 24H1 Yiliang Sand Mine and Guda Sand Mine were completed and put into operation one after another, and the production cost of self-produced silica sand continues to decrease. On the premise of ensuring stable supply, increase the direct procurement ratio, expand the scope of collection, incremental strategic procurement, and achieve direct supply of natural gas at some plants.

Profit forecast and investment rating: Considering the pressure on float glass profits caused by the continued decline in real estate completion, we lowered the profit forecast. The company's 24-26 revenue is 17.984, 19.756, and 21.103 billion, respectively, +14.67%, +9.86%, and 6.81%, respectively, and net profit to mother is 1.177, 1.361, and 1.675 billion, respectively, -32.79%, +15.66%, and +23.07%. The corresponding PE is 12.2, 10.55 and 8.57. Considering the company's leading float glass cost, photovoltaic glass brought new growth and maintained the “recommended” rating.

Risk warning: Industry supply increased beyond expectations; downstream demand fell short of expectations; costs rose above expectations.