In the first half of 2024, the company's revenue fell 40.41% year on year to 38.529 billion yuan, net profit to mother fell 157.13% year on year to -5.243 billion yuan, and after deducting non-net profit, fell 158.24% year on year to -5.277 billion yuan. Q2 revenue was 20.855 billion yuan, down 42.60% year on year, up 18.00% month on month, and net profit to mother recorded -2.893 billion yuan, down 152.21% year on year and 23.10% month on month. The pressure on the company's performance in the first half of the year was mainly due to the large scale of depreciation. Currently, the company is actively deploying BC production capacity and is expected to obtain excess revenue from this product.

A brief analysis of the semi-annual report. In the first half of 2024, the company's revenue fell 40.41% year on year to 38.529 billion yuan, net profit to mother fell 157.13% year on year to -5.243 billion yuan, and after deducting non-net profit, fell 158.24% year on year to -5.277 billion yuan. Q2 revenue was 20.855 billion yuan, down 42.60% year on year, up 18.00% month on month, and net profit to mother recorded -2.893 billion yuan, down 152.21% year on year and 23.10% month on month.

The impairment affected the results of the first half of the year, and there was plenty of cash on hand. In the first half of the year, the company shipped 31.34 GW of modules (10 GW of BC modules), of which Q1 shipped 12.89 GW (HPBC 4.75 GW) and Q2 shipped 18.45 GW (BC 5.25 GW). Silicon wafers were shipped 44.44 GW in the first half of the year (export sales 21.96 GW), of which Q1 shipped 26.74 GW (export sales 12.43 GW) and Q2 shipments 17.7 GW (export sales 9.53 GW). The month-on-month decline in export sales was mainly due to the large drop in silicon wafer prices, and there was some pressure on the silicon wafer profit/cash flow, so the company reduced the scale of shipments. In the first half of the year, the company lost net profit to mother, and lost 6.266 billion yuan in operating profit, mainly due to depreciation of 5.784 billion yuan in assets, of which inventory was prepared for price reduction of 4.87 billion yuan due to the continued decline in prices of major products (3.614 billion yuan for inventory products, 0.606 billion yuan for products, 0.363 billion yuan for raw materials), depreciation of long-term assets such as fixed assets Prepare 0.859 billion yuan, and reserve 0.055 billion yuan for depreciation of contract assets. The company's net operating cash flow in the second quarter was -1.524 billion yuan, an improvement over Q1 (-4.889 billion yuan in Q1), mainly due to lower shipments in Q2. In addition, it is also related to the fact that Q1 usually requires advance inventory preparation. At the end of the second quarter, the company's monetary capital and transactional financial assets totaled about 54.5 billion yuan, with plenty of cash.

Actively expand BC production capacity. According to the company's disclosure, the company's BC production capacity will reach 70 GW by the end of 2025 (of which HPBC 2.0 production capacity is about 50 GW), and all domestic battery production capacity will be switched to BC products by the end of 2026.

According to the company's disclosure: a) the gross margin of HPBC2.0 products is about 10 percentage points higher than TopCon; b) the second-generation product has a power generation advantage of 6% or more compared to TopCon; c) the current second-generation product costs slightly higher than TopCon, and there is an opportunity to remain flat; d) HPBC 2.0's premium is 0.1-0.2/W compared to TopCon; e) the second-generation product has signed more than 1 GW of component orders in less than 2 months after launch. If the cost, yield, efficiency, reliability, promotion, etc. of BC products meet expectations, the company can expect to obtain excessive profits from BC products.

Profit forecasting and investment ratings. Currently, module prices continue to drop, and there is some pressure on delivery in the integration process. This year's industry performance is generally under pressure. The company's net profit from 2024-2025 is expected to be -8.053 billion yuan and 2.515 billion yuan respectively. The company is a leading photovoltaic company and maintains a “highly recommended” rating.

Risk warning: Global PV installations fall short of expectations, module prices continue to fall, and BC's progress falls short of expectations.