Key points of investment

New production capacity was released in an orderly manner, and performance achieved rapid growth

With 2024H1, the company achieved operating income of 10.696 billion yuan, up 10.51% year on year; net profit to mother was 1.499 billion yuan, up 38.14% year on year. Achieved a gross sales margin of 23.78%, a year-on-year increase of 4.66pct; a net sales margin of 14.03%, an increase of 2.82pct year-on-year. With 2024Q2, the company achieved operating income of 4.97 billion yuan, an increase of 15.22% year on year; net profit to mother was 0.739 billion yuan, an increase of 28.83% year on year. Achieved a gross sales margin of 26.45%, an increase of 6.52 pcts year on year; net sales margin was 14.92%, up 1.61 pct year on year. 2024H1, the company released new production capacity, and the sales scale expanded steadily. At the same time, profitability improved year-on-year, and net profit to mother grew rapidly.

Production expansion projects are progressing steadily, and future production capacity is expected to continue to be released

2024H1, the company's total production capacity is 23,000 tons/day, of which 2,600 tons/day has been refrigerated. Currently, the domestic Anhui project, the Nantong project, and overseas projects are progressing normally. Anfu Glass's 1.5 million-ton transparent panel manufacturing project is estimated to have a total investment of 3.753 billion yuan, Nantong Follett's 1.5 million-ton transparent panel and back panel manufacturing project has an estimated total investment of 3.885 billion yuan, and Indonesia's solar energy 1 million ton high-transparency panel manufacturing project is expected to advance in an orderly manner with a total investment of 0.29 billion US dollars, and future production capacity will be released steadily.

Leading technology for large-scale kilns, significant cost reduction and efficiency advantages

Among the existing production lines, the company's large kilns of kilotons and above account for more than 90%. Compared with small kilns, the combustion and temperature inside large kilns are more stable, unit consumption is lower, and the yield will be further improved. Therefore, based on the scale of existing kilns, the company will independently develop large-scale kilns. Breaking through the technical bottleneck of large kilns will further reduce costs and consolidate its competitive advantage in the photovoltaic glass industry. In the future, with its customer base, scale advantage, resource advantage and technical advantage, the company will continue to operate steadily, reduce costs and increase efficiency, and strive to maintain its leading position in the industry.

Profit forecasting and valuation

The profit forecast was lowered and the “buy” rating was maintained. The company is a leading domestic photovoltaic glass company, reducing costs, increasing efficiency and stable profits during the downturn of the industry. Considering the continuous decline in the price of photovoltaic glass and the phased pressure on the company's product profits, we lowered the company's profit forecast for 2024-2026. We expect the company's net profit to be 2.37, 3.27, and 4.17 billion yuan respectively in 2024-2026 (3.807 billion yuan, 4.969 billion yuan, and 6.206 billion yuan respectively before the reduction), and the corresponding EPS is 1.01, 1.39, and 1.78 yuan, respectively. The corresponding PE is 15, 11, and 9 billion yuan, respectively times.

Risk warning

Increased competition in the photovoltaic industry; fluctuating raw material prices; international trade friction; risk of exchange rate fluctuations