1H24 achieved revenue of 13.78 billion yuan (yoy -9.5%), maintained profit forecast/adjusted target price of Shenzhen Gas released its semi-annual report, 1H24 achieved revenue of 13.78 billion yuan (yoy -9.5%), net profit of 0.738 billion yuan (yoy +14%), deducted non-net profit of 0.703 billion yuan (yoy +18%); 2Q24 achieved revenue of 6.917 billion yuan (yoy -9.5%), net profit of 0.462 billion yuan (yoy +18%) . Maintaining the profit forecast, we expect the company's EPS in 2024-2026 to be 0.62/0.69/0.80 yuan, respectively; the company's net profit from gas/photovoltaic film is estimated to be 1.66/0.12 billion yuan in 24. The average PE value for the gas/photovoltaic film industry in 2024 is 10/18x (Wind agrees). The company was given 14x target PE for the gas sector in 2024 (premium due to the company's net profit CAGR of 16%, higher than that of peers), 15x target PE for the photovoltaic film sector (discount due to the net profit CAGR of the company's photovoltaic film being 28%, lower than 40% of its peers), with a target market value of 25.1 billion yuan and a target price of 8.72 yuan (previous value of 8.8 yuan). Maintain “buy-in.”

Urban fuel sales in the Greater Bay Area accelerated in 2Q24, with demand for power plants being pressurized by rain, 2Q24 sales totaled 1.429 billion square meters (yoy +7.0%, 2.8 pp slower than 1Q24); by channel, pipeline gas 1.317 billion square (yoy +2.8%) and wholesale gas 0.112 billion square meters (yoy +104%); by region, pipeline gas sales in the Greater Bay Area were 0.785 billion square meters (yoy +1.2%), pipeline gas sales in other regions 0.533 billion square meters (yoy +5.2%); power plant sales volume: 0.416 billion square meters (yoy -11%), affected by rain; after excluding power plant sales, pipeline gas sales in the Greater Bay Area in 2Q24 were yoy +22%, 17pp faster than 1Q24, thanks to the residential demand brought about by urban village renovation and the demand for commercial gas driven by Hong Kong people moving north. The net profit of 1H24 urban gas was 0.298 billion yuan (yoy +46%), thanks to gas volume growth and price difference correction; net profit from gas resources was 0.173 billion yuan (yoy +22%) to seize the opportunity of declining resource prices.

The net profit of 1H24 photovoltaic film is yoy -52%, and the first unit of Shengnen Thermoelectric Phase II was put into operation. 1H24 Swick's photovoltaic film sales volume was 0.283 billion flat (yoy -11%). The company adjusted its sales strategy in response to industry changes; revenue yoy -36% to 1.896 billion yuan, and net profit yoy -52% to 0.041 billion yuan, mainly affected by PV film price reduction. The price of photovoltaic film is greatly affected by the upstream raw material EVA particles (accounting for about 90% of the cost). Since '24, the price of EVA is YOY -26%, but the price has stabilized recently. In June 2024, the first 9F unit of the Shenzhen Thermal Power Gaobu Power Plant renovation and expansion project was successfully put into operation, which is expected to improve the company's natural gas power generation efficiency.

1H24 Smart Service's net profit yoy -2%, extended business products and channels broadened 1H24's smart service division's external revenue of 1.037 billion yuan (yoy -5%), net profit of 0.322 billion yuan (yoy -2%), of which: 1) Youhuijia promoted product upgrades, entered the Anju Group supply chain and signed 5 community sales projects, which is expected to contribute to gas appliances and kitchen appliances sales in the future; 2) Ruili Technology added 1 external customer, signed 7 external contracts, and gas meter sales are expected to expand.

Risk warning: gas prices have risen sharply; demand for photovoltaic film falls short of expectations.