occurrences

On August 27, 2024, the company released its 2024 semi-annual report. 2024H1 achieved operating income of 7.59 billion yuan, a year-on-year increase of 118.3%, achieved net profit of 0.23 billion yuan, an increase of 14.9% over the previous year, and realized net profit after deducting 0.35 billion yuan of non-return to mother, an increase of 154.2% over the previous year.

Among them, the 2024Q2 company achieved operating income of 3.94 billion yuan, a year-on-year increase of 104.6%, an increase of 8.2% over the previous year, achieved a net profit of 0.06 billion yuan, a year-on-year decrease of 50.9%, a year-on-year decrease of 67.5%, and realized net profit without deduction of 0.16 billion yuan, a year-on-year increase of 169.1% and a decrease of 19.9% month-on-month.

Photovoltaic silver paste shipments continue to increase dramatically

The company followed the demand trend and continued to improve the product delivery structure. 2024H1's photovoltaic conductive silver paste business achieved operating income of 6.76 billion yuan, a year-on-year increase of 105.2%, achieving a gross profit margin of 11.8%, a year-on-year decrease of 0.3 pct, and achieved silver paste sales of 1,132 tons, an increase of 76.1% year on year. Among them, N-type TopCon silver paste sold 988 tons, accounting for a significant increase of 40.7% in the same period in 2023.

Increase R&D investment and consolidate technological competitive advantage

The company continues to step up product technology research and market development efforts, adapt to the characteristics of accelerated iterative upgrading of technology in the N-type era, and further consolidate the company's leading position in the photovoltaic cell conductive silver paste industry. 2024H1 invested 0.24 billion yuan in R&D, up 177.4% year on year, accounting for 3.2% of total revenue, up 0.7 pct year on year. The company focuses on strengthening its technological leadership in the field of a full set of conductive silver paste on the front and back of N-type TopCon batteries. In addition, HJT low-temperature silver paste and silver-coated copper paste have been shipped on a large scale, BC metallized paste has continued to be mass-produced, and further laid out the development of metallization solutions for perovskite and crystalline silicon laminated batteries to consolidate the company's leading position.

Fluctuations in silver prices and exchange rates affect net profit attributable to mother

2024H1 Company's non-recurring profit and loss of 0.12 billion yuan had an impact on the company's net profit due to the company's net profit, mainly investment income and fair value change profit and loss of silver futures, silver leases, and fair value change profit and loss of the company's special fund investment due to fluctuations in silver points and exchange rate, and fair value change profit and loss calculated at the end of the company's special fund investment in SMIC.

Profit forecasting and investment advice

We expect the company's revenue for 2024-2026 to be 15.06/18.11/20.94 billion yuan, respectively, 56.8%/20.3%/15.6% year-on-year; net profit to mother is 0.56/0.73/0.8 billion yuan, respectively, with year-on-year growth rates of 44.7%/30.4%/9.5%, respectively. EPS was 3.97/5.17/5.66 yuan/share, respectively. The price of 2024Q2 silver has risen sharply, increasing the company's revenue scale. Affected by industry competition, processing costs have been partially squeezed. The company's leading position is stable, technology research and development advantages are outstanding. It is optimistic about long-term development potential, and maintains a “buy” rating.

Risk warning: The growth rate of PV installed capacity fell short of expectations; silver prices fluctuated greatly; industry competition intensified.