Event: The company released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 37.357 billion yuan, -8.54% year-on-year; realized net profit to mother of 0.874 billion yuan, or -118.16% year-on-year. Among them, in 2024, Q2 achieved operating income of 21.385 billion yuan, +5.02% YoY, +33.90% month-on-month; realized net profit to mother -0.391 billion yuan, or -117.54% YoY.

The industry has entered the phase of capacity removal. Since 2023, new production capacity has begun to be gradually released in all links of the industrial chain. Affected by the imbalance between supply and demand, prices in the industrial chain have dropped sharply, and prices in many links have fallen below the cost line, leading to losses in the entire industry chain. As a result, enterprises shut down production lines and project delays or cancellations have continued to occur, and the industry has entered the stage of de-capacity.

Give full play to your advantage and achieve growth in shipment volume. Although the industry is in the clean-up stage, the company made full use of its global marketing service network and brand advantages to further increase its market development efforts. Battery module shipments increased dramatically over the same period last year. During the reporting period, the company's battery module shipments exceeded 38 GW (including 1 GW for personal use), of which overseas module shipments accounted for about 54%.

Accelerate the growth of n-type battery production capacity. According to the company's production capacity plan, by the end of 2024, the company's module production capacity will exceed 100 GW, and the silicon wafer and battery production capacity will reach 80% of the module production capacity, including 57 GW of N-type batteries. During the reporting period, production capacity of N-type batteries was achieved rapidly, product yield and battery conversion efficiency were greatly improved, production costs were significantly reduced, and large-size batteries reached the leading level in the industry in terms of conversion efficiency and production costs.

At present, the mass production conversion efficiency of the company's latest N-type Bycium+ (Bycium+) battery has reached 26.5%. The process will continue to be improved to further reduce battery production costs and improve battery cost performance.

Investment advice: Considering that component prices are still low, we expect the company's net profit to be 1.597/2.337/3.352 billion yuan in 24-26, -122.7%/246.4%/43.4% year-on-year, corresponding EPS of -0.48/0.71/1.01 yuan, respectively, giving a “gain” rating.

Risk warning: risk of overcapacity; risk of exchange rate fluctuations; risk of demand falling short of expectations.