Flat(SH:601865) AVIC Securities·2024-09-09 10:30Investment Rating - The investment rating for the company is "Buy" indicating an expected return of over 10% relative to the CSI 300 index in the next six months [21]. Core Views - The company's mid-year performance exceeded expectations, marking a turning point in profitability despite short-term pressures from downstream demand [2]. - The photovoltaic glass market is experiencing short-term disruptions due to a slowdown in installation demand in the US and China, although both markets show some resilience [2]. - The decline in raw material prices is expected to enhance profitability, and the company maintains a leading position in the industry with its high-quality capacity layout [2]. Summary by Sections Financial Performance - In H1 2024, the company achieved revenue of 10.696 billion yuan, a year-on-year increase of 10.5%, and a net profit attributable to shareholders of 1.499 billion yuan, up 38.1% year-on-year. The gross margin was 23.8%, an increase of 4.7 percentage points, and the net margin was 14.0%, up 2.8 percentage points [2]. - The operating cash flow improved significantly, with a net cash flow of 1.746 billion yuan, a notable recovery from a negative 845 million yuan in the same period last year [2]. Market Dynamics - The photovoltaic market is under pressure, with new installations in China reaching 123.5 GW from January to July 2024, a year-on-year increase of 27.1%. In the US, new installations were 15.6 GW, up 38.6% year-on-year. However, the growth rate has slowed compared to last year, with demand growth lagging behind capacity expansion [2]. - As of the end of August 2024, the inventory of photovoltaic glass companies reached 35.8 days, the highest level since 2023, indicating a deteriorating supply-demand balance in the market [2]. Profitability and Capacity - The company's photovoltaic glass revenue for H1 2024 was 9.659 billion yuan, a year-on-year increase of 9.9%. The gross margin for this segment was 24.7%, up 4.7 percentage points due to low prices of key raw materials like soda ash and natural gas [2]. - The total production capacity as of June 2024 was 23,000 tons per day, with 2,600 tons in cold repair status. The company is actively managing its capacity in response to market conditions [2]. Investment Recommendations - The company is expected to maintain a stable trend in both volume and profit, with projected net profits attributable to shareholders of 2.76 billion yuan, 3.63 billion yuan, and 4.34 billion yuan for 2024, 2025, and 2026, respectively. Corresponding PE ratios are expected to be 15, 12, and 10 [2].