Event: The company released its 2024 three-quarter report. 2024Q1-Q3 achieved revenue of 14.59 billion yuan, +16.5% YoY, net profit of 1.1 billion yuan YoY, +38.8% YoY net profit of 1.06 billion yuan, +33.2% YoY; in a single quarter, 24Q3 achieved revenue of 5.72 billion yuan, +19.6% YoY, +30.4% month-on-month, net profit 0.46 billion yuan YoY, +38.9% YoY, +22.7% month-on-month, net profit 0.45 billion yuan, +42.8% year over year, +26.7% month over month. The results exceeded our expectations.

The performance exceeded expectations, mainly due to the continued strong profitability of the PV business. 1) Financial expenses: 2024Q3 financial expenses of 0.13 billion yuan, mainly due to an increase in exchange gains and losses due to exchange rate changes; 2) Copper alloy: 24H1 copper alloy sales total 0.113 million tons, +33.1% year over year. As the 0.05 million ton strip project and Vietnam's 0.0318 million-ton rod and wire project climbed to a certain level, we expect 24Q3 copper alloy sales to remain stable month-on-month. After excluding the impact of exchange gains and losses, we expect 24Q3 copper alloy sales to remain stable month-on-month. The profit contribution was basically the same; 2) PV: 24H1 PV module sales volume was 973 MW, -8.5% year over year, slightly falling short of expectations. We expect 24Q3 module sales to recover significantly, while the profit level remains high, driving the company's 24Q3 performance to exceed expectations. In terms of the double countervailing policy, on October 1, 2024, US time, the US Department of Commerce announced the preliminary ruling on the countervailing duty on crystal photovoltaic cells in the four Southeast Asian countries. The company's wholly-owned subsidiary, Bovelt, was determined to have a countervailing duty rate of 0.81%. We believe that the current countervailing duty has little impact on the company's photovoltaic sector, and the profit level is expected to remain high.

Core highlights: 1) Copper alloy: 0.05 million ton strip project production capacity released, product structure continued to be optimized. At the end of 2023Q2, the 0.05 million ton strip project was put into operation. As the project gradually climbed, the share of high-processing cost products increased steadily; by the end of 24H1, the 0.03 million ton special alloy electronic material strip production expansion project had completed the construction of the main plant, and other work was progressing according to plan. The 0.02 million ton special alloy electronic material wire expansion project had completed the construction of the main plant and basic supporting facilities, and entered the equipment installation and commissioning stage. With the gradual release of production capacity in the 0.05 million ton strip project and the planned production expansion project, the copper alloy product structure is expected to continue to be optimized, driving the sector's performance to rise rapidly; 2) PV: The production expansion project progresses smoothly, and the profit level is expected to remain high. In August 2023, the company plans to build a new 3GW battery in Vietnam and a new 2GW Topcon module production capacity in the US. As demand in the US continues to improve, it plans to build a new 2GW Topcon battery production capacity in the US by the end of 2023. By the end of 24H1, the 3GW battery project in Vietnam was successfully built, and gradually entered the equipment delivery, installation and commissioning stage. The company's photovoltaic business has the advantage of overseas industrial chains, and the profit level is expected to remain high.

Investment advice: The production capacity of the copper alloy expansion project is gradually being released, the product structure continues to be optimized, and the profitability is expected to remain high. We expect the company's net profit to mother in 2024-2026 to be 15.5, 21.0, and 2.50 billion yuan. PE corresponding to the closing price on October 25, 2024 is 10, 7, and 6 times, respectively, maintaining the “recommended” rating.

Risk warning: demand falls short of expectations, project progress falls short of expectations, US PV policy changes, etc.