occurrences

The company released its 2024 semi-annual report. 2024H1 revenue was 2.98 billion yuan, yoy +7%; net profit to mother and net profit without return to mother were -0.05 and -0.07 billion yuan respectively, all of which turned into year-on-year losses. Among them, Q2 revenue was 1.54 billion yuan, yoy +14%, and qoq +7%; net profit to mother and net profit without return to mother were -0.05 and -0.06 billion yuan respectively, which turned into losses year over year, and the month-on-month loss margin increased.

Production and sales of photovoltaic glass have increased, and profits are under phased pressure

2024H1's revenue grew rapidly, and the release of new production capacity and improved yield drove rapid growth in production and sales. 2024H1's photovoltaic glass production and sales were 0.196/0.194 billion flat, respectively, yoy +27%/+31%, respectively. 2024H1 has put into operation 1 production line and 3 cold repair production lines; by the end of 2024M6, the company's photovoltaic glass production capacity was 5,620 tons/day, yoy +7%. 2024H1's net profit margin was -1.8%, yoy-6.5pct, and profit was under phased pressure.

On the one hand, the profit of photovoltaic glass declined sharply. The gross profit of 2024H1's PV glass was 1.0 yuan, yoy-1.0 yuan/ -48%, -1.0 yuan/ -49% month-on-month; the gross margin was 6.9%, yoy-4.3pct, -4.8pct month-on-month, mainly due to the continuous decline in the price of photovoltaic glass. The average price of 2024H1 2mm photovoltaic coated glass in the country was 17.0 yuan, yoy-1.7 yuan/ -9%, -1.2 yuan/ -7% month-on-month. On the other hand, a decrease in other earnings and an increase in asset impairment losses also caused a certain drag on profits.

Focusing on the pace of thin-film battery asset integration, the growth prospects are worth looking forward to in 202H1 hosting 55% of Chengdu China Building Materials, 45% of Ruichang Building Materials (all cadmium telluride thin-film battery manufacturers), and 60% of Kaisheng Photovoltaics (copper, indium, gallium and selenium thin film battery manufacturer) shares, followed by timely mergers and acquisitions. 2022 M12 escrow assets were transferred to Kaisheng Glass Holdings. The company re-signed the escrow agreement, and the escrow assets were changed to 100% of Kaisheng Glass Holdings, which is valid until the end of 2023. 2024M3 signed an agreement to continue hosting 65% of Kaisheng Glass Holdings. As a new energy materials platform under Kaisheng Group, the company's photovoltaic glass/thin-film battery business pattern is beginning to take shape, and the growth prospects are worth looking forward to.

The growth prospects of the new energy materials platform are worth looking forward to. The “buy” rating was given. As demand for photovoltaic glass fell short of expectations, we lowered our profit forecast. The company's revenue for 2024-2026 is 7.6/9.2/11.1 billion yuan, yoy +16%/+20%, respectively, net profit to mother is 0.23/0.29/0.38 billion yuan, YOY is -43%/+28%/+38%, and EPS is 0.35/0.44/0.59 yuan respectively.

In recent years, the company has been in a period of strategic transformation. Information shows that the glass and architectural glass business is gradually being divested, and 2024H1's performance is under phased pressure. The company focuses on the main photovoltaic glass industry. With the gradual implementation of production capacity under construction, the scale advantage is expected to gradually become apparent. At the same time, with platform support from China Building Materials Group and Kaisheng Technology Group, etc., the company's growth prospects are worth looking forward to, and the company's growth prospects are worth looking forward to, maintaining a “buy” rating.

Risk warning: The commissioning progress of photovoltaic glass production lines falls short of expectations; risk of rising raw material prices; risk of PV installations falling short of expectations.