Event: The company publishes its 2024 mid-year report. In the first half of 2024, the company achieved revenue of 15.059 billion yuan, +5.95% year-on-year; net profit to mother was 4.039 billion yuan, -10.58% year-on-year. The 24Q2 Company achieved revenue of 7.16 billion yuan, +4.51% YoY; net profit to mother was 1.617 billion yuan, or -22.91% YoY.

Overall revenue increased in the first half of the year due to the resonance of the three major operating factors of wind power and photovoltaics.

In terms of installed capacity, wind power and photovoltaics both added capacity and were connected to the grid in the first half of the year. By the end of June '24, the company held 41.37 GW of installed capacity, including 19.62 GW of wind power, 20.58 GW of photovoltaics, 0.20 GW of hydropower, and 0.96 GW of energy storage. In the first half of the year, the company added 1.3264 million kilowatts of grid-connected capacity, including 0.208 million kilowatts of wind power and 0.7584 million kilowatts of solar power. Using the number of hours, wind power and photovoltaics both declined year-on-year in the first half of the year. In the first half of 2024, the average utilization time of the company's wind power was 1,243 hours, a decrease of 10 hours over the previous year. The utilization rate of wind power plants was 99.03%, down from the previous year. The average utilization time of solar power generation was 693 hours, a decrease of 12 hours compared to the previous year. The utilization rate of solar power plants was 99.24%, a slight decrease from the previous year. Under the combined influence of installed capacity and number of hours used, wind power and photovoltaic power generation increased year-on-year in the first half of the year. Among them, wind power generation was 23.058 billion kilowatt-hours, +12.04% year over year; photovoltaic power generation was 12.618 billion kilowatt-hours, +73.28% year over year. In terms of feed-in electricity prices, photovoltaics dropped significantly year-on-year. In the first half of '24, feed-in tariffs for wind power and photovoltaics (excluding tax) were 0.456 yuan/kilowatt-hour and 0.372 yuan/kilowatt-hour, respectively, -8.22% and -26.45%, respectively. At the same time, new grid-connected projects were put into operation in 2023 during the reporting period, fixed asset depreciation and project operating costs increased, and the overall gross margin of electricity sales declined.

Credit depreciation of 0.435 billion yuan in the first half of the year was mainly due to an increase in green electricity subsidies receivable.

By the end of June '24, the company's green electricity subsidy balance reached 42.24 billion yuan, an increase of 17.3% over the beginning of the year; bad debt provisions were 1.903 billion yuan, an increase of 28.5% over the previous year. As a result, the company's credit depreciation in the first half of the year was 0.435 billion yuan, an increase of 0.14 billion yuan over the previous year.

Profit forecast, valuation and rating: The company's Lüden installed equipment expanded rapidly, and depreciation and operating costs increased significantly year-on-year, which had a certain impact on the overall profit growth rate. We lowered our 24-26 net profit forecast to 7.78/9.236/10.902 billion yuan (previous value was 8.992/10.378/12.182 billion yuan, down 13%/11%/10%, respectively). The corresponding EPS for 24-26 years was 0.27/0.32/0.38 yuan, respectively, and the corresponding PE was 17/14/12 times. Considering the company's sufficient approved capacity and the large volume of aircraft under construction (the company added 1.4412 million kilowatts of approved/registered projects in the first half of the year, and the total planned installed capacity of 23.477 million kilowatts of projects under construction), there is room for strong growth in the future, and performance is expected to grow rapidly, so we maintain a “buy” rating.

Risk warning: The sharp rise in raw material prices in the photovoltaic and wind power industries affects the company's profitability, and the progress of reducing offshore wind power costs falls short of expectations.