Incident: On August 30, the company released its 2024 semi-annual report. During the reporting period, the company achieved revenue of 38.529 billion yuan, -40.4% year on year; net profit to mother - 5.243 billion yuan, -157.13% year on year; net profit after deducting non-return to mother - 5.277 billion yuan, or -158.24% year on year. 24Q2 achieved revenue of 20.855 billion yuan in a single quarter, -42.6% YoY, +18.0% month-on-month; net profit to mother -2.893 billion yuan, -152.2% YoY, -23.1%.

Increased shipments are difficult to withstand weak prices, and large depreciation profits are under pressure in the short term. In the first half of 2024, the company achieved 44.44 GW of silicon wafers (21.96 GW of external sales); 2.66 GW of external battery sales; 31.34 GW of module shipments. Among them, sales in the Asia-Pacific region increased significantly by more than 140% year on year. 24Q2 sold about 9.56 GW of silicon wafers in a single quarter, and shipped about 18.5 GW of modules. In terms of profitability, the 24Q2 company's gross profit margin and net margin were 6.61% and -13.90%, respectively, -2.28pct and -0.56pct, respectively. Silicon wafer prices fell rapidly in the second quarter, and downstream battery module prices fell, putting pressure on the company's product profits. At the same time, due to declining price factors such as inventory, Q2 recorded asset impairment losses of 2.97 billion yuan in a single quarter, which had a significant impact on net profit.

Firmly adhering to the BC technology line, bucking the trend and expanding shows confidence in development. Against the backdrop of oversupply and intrusive prices in the photovoltaic industry, the company insists on technological breakthroughs and is expected to lead the transformation of the industry. Based on BC technology, the company continuously broke the world record for conversion efficiency of crystalline silicon batteries. The battery efficiency of the HPBC 2.0 mass production line has reached 26.6%, and BC second-generation products of the same area have significant power generation gain compared to TopCon. In terms of production capacity, with the construction of BC second-generation projects with an annual output of 12.5GW batteries and 12GW batteries in the Xixian New Area progressing, HPBC 2.0 products will be launched on a large scale by the end of 2024. It is expected that the company's BC production capacity will reach 70 GW by the end of 2025, and all domestic battery bases plan to migrate to BC products by the end of 2026. In August '24, BC components were selected for the first time in a large-scale central enterprise tender project, and it is expected that they will gradually be used on a large scale in centralized power plants.

Investment advice: The company insists on steady operation, BC products continue to break through, and have the potential for differentiated development. Taking into account the declining price factors in the industrial chain, the company is expected to achieve revenue of 86.634 billion yuan, 108.396 billion yuan and 128.450 billion yuan respectively in 2024-2026, and realized net profit of -4.52 billion yuan, 3.066 billion yuan, and 5.154 billion yuan, respectively, with year-on-year increases of -142.0%, 167.8%, and 68.1%. The 2025-2026 EPS is 0.40 and 0.68 yuan respectively, and the 2025-2026 PE multiples corresponding to the current stock price are 32.5X and 19.3X, respectively, maintaining the “buy” rating.

Risk warning: Production capacity expansion falls short of expectations; market competition intensifies; downstream demand falls short of expectations; new technology development progress falls short of expectations, etc.