The US dollar cut interest rate in excess of expectations favors the decline in loan interest rates: On September 19, the Federal Reserve FOMC meeting lowered the benchmark interest rate by 50 basis points to the 4.75-5.0% range, exceeding market expectations. The Hong Kong Monetary Authority then announced simultaneous interest rate cuts. The company's average loan interest rate at the end of June was 4.71%, and HKD loans accounted for 78%. HKD interest rate cuts that exceeded expectations helped reduce loan interest rates. Based on financial data at the end of June, for every 0.25 percentage point drop in Hong Kong dollar interest rates, profit will increase by HK$0.013 billion, accounting for 1.6% of 2024 profit. For every 5 percentage point increase in the share of RMB loans with lower interest rates, profit will increase by HK$0.007 billion, accounting for 0.8% of 2024 profit. As the US dollar continues to cut interest rates and the share of RMB loans increases, we expect the company's loan interest rate to drop to 4.7%/3.8%/3.3% in 2024-26. There is still plenty of room for decline. At the end of the period, the share of Hong Kong dollar loans will drop to 70%/65%/60%, respectively.

The price of PV modules continues to hit new lows, which is beneficial to the increase in yield of new projects: due to increased oversupply, the price of N-type PV modules fell from 1 yuan/watt at the beginning of the year to 0.75 yuan/watt at present, and is still at a new low. We expect that in the face of intense competition in the PV manufacturing industry, module prices will remain low for a long time, which is beneficial to the reduction in investment costs and yield increases in the company's new projects.

After the stock price plummeted, the valuation was attracted and raised to purchases: due to the appreciation of RMB and interest rate cuts in the US dollar exceeding expectations, we raised our 2024-26 profit forecast by 2%/3%/4%, maintaining 10 times the 2024 price-earnings ratio, and raising the target price to HK$1.02 (originally HK$1.00). After the stock price plummeted by 37% this year, the company's dividend rate in 2025 is currently as high as 7.2%. We think the valuation is attractive. The lower than expected US dollar interest rate cut is expected to fix investors' pessimistic expectations of the company. The declining interest rate cycle favors the company's profit upward, and the rating is raised from neutral to buying.