The company's shipments and revenue increased. The company released its 2024 semi-annual report. In the first half of 2024, it achieved operating income of 1.68 billion yuan, a year-on-year increase of 30.3%, achieved net profit due to mother of 0.036 billion yuan, a year-on-year decrease of 50.7%, and realized net profit after deduction of 0.028 billion yuan, a year-on-year decrease of 59.8%. Looking at the breakdown, the company achieved operating income of 0.98 billion yuan in the second quarter of 2024, an increase of 33.3% year-on-year, and achieved net profit of 0.0013 billion yuan. The ratio decreased by 96.4% to achieve net profit not attributable to mother - 0.0007 billion yuan, a year-on-year decrease of 102.0%.

Short-term accruals affect profits. Considering that the price of copper as a raw material from 2023 to 2024Q1 was relatively stable, the price of 2024Q2 copper rose rapidly by 15% month-on-month. As a production model for copper processing, we believe that the increase in revenue was mainly due to a rapid increase in shipments. The company's revenue increased 30% year-on-year in the first half of 2024. We assume that shipments increased 20-25% in the first half of 2024, then the shipping side was about 0.018-0.019 million tons. The sharp decline in profit in the first half of 2024 was mainly due to the company's prudential calculation of impairment losses of about 0.036 billion yuan. After excluding this part of the impact, the company's operating side achieved profit of 0.072 billion yuan, and the net profit per ton calculated based on shipment volume of 0.0185 million tons was about 3,900 yuan. The subsequent impairment is expected to recover and improve the company's overall profit.

Seize future technology trends and gradually increase the supply of BC welding belts. Currently, photovoltaic welding belts are gradually being switched from MBB to SMBB products to match the market demand of TopCon products. Considering that the thinning of the welding belt can reduce the blocking of light by the welding belt and improve battery conversion efficiency, it is expected that 0BB products will also be quickly introduced into TopCon technology. In addition, the company also has technical capabilities for leading products such as BC battery welding belts, and has now been gradually shipped. Changes in the product structure are expected to improve the profitability of the company's units, and the company is expected to lead the development of the industry as a leading photovoltaic welding belt company.

Profit forecast, valuation and investment rating: Considering the current intense market competition, we adjusted the company's projected operating income for 2024/2025/2026 to be 3.68/4.64/5.55 billion yuan (previous value 3.87/4.69/5.5 billion yuan), and the 2024/2025/2026 forecast net profit to mother was 0.14/0.2/0.23 billion yuan (previous value 0.23/0.3/0.36 billion yuan), respectively, based on the current total share capital The calculated diluted EPS is 1.35/1.92/2.17, respectively. The company's current stock price is predicted to be 22/15/14 times PE in 2024/2025/2026, respectively. Considering that the company is a leading domestic welding belt, it will lead the development of new SMBB welding belts and 0BB welding belts required for N-type battery technology in the future, maintaining an “gain” rating.

Risk warning: Risk of PV demand falling short of expectations; risk of fluctuating raw material prices; risk of falling product prices; production capacity investment falling short of expectations; risk of not updating the information data used in the research report in a timely manner.