ERDOS(600295) 国泰君安·2024-09-11 10:23Investment Rating - The report maintains a "Buy" rating for the company [3][5]. Core Views - The company's performance in the first half of 2024 was below expectations, with revenue of 13.411 billion yuan, a year-on-year decline of 10.44%, and a net profit attributable to shareholders of 1.007 billion yuan, down 39.56% year-on-year. The decline in performance is attributed to price pressures in the silicon iron and PVC industries, which are at the bottom of the cycle. However, the company's cash flow remains robust, and share buybacks combined with high dividends highlight its investment value [3][4]. - The forecast for net profit attributable to shareholders for 2024-2025 has been revised down to 1.959 billion yuan and 2.124 billion yuan, respectively, from previous estimates of 3.356 billion yuan and 3.643 billion yuan. A new forecast for 2026 has been added at 2.374 billion yuan, corresponding to EPS of 0.70, 0.76, and 0.85 yuan for 2024, 2025, and 2026, respectively [3][4]. - The company benefits from a cost advantage in silicon iron production, with electricity costs accounting for 60-70% of production costs. The company produces its own coal and has its own power plant, resulting in lower electricity costs compared to industry averages. This cost advantage extends to other chemical products such as PVC and caustic soda [3][4]. - The silicon iron industry is currently at a low point, with prices affecting the company's profitability. The silicon iron market experienced significant price fluctuations in the first half of 2024, primarily driven by demand from the steel industry, which has seen declining profitability [3][4]. - The company has announced plans for share buybacks and high dividend payouts, with a dividend payout ratio of 77.11% in 2023, an increase of 34.87 percentage points from 2022. This reflects the company's confidence in its development and enhances its investment value [3][4]. Financial Summary - In the first half of 2024, the company achieved revenue of 13.411 billion yuan, a decrease of 10.44% year-on-year, and a net profit attributable to shareholders of 1.007 billion yuan, down 39.56% year-on-year [3][4]. - The company's operating cash flow for the first half of 2024 was 1.211 billion yuan, indicating stable cash flow despite the industry's downturn [3][4]. - The target price for the company has been adjusted to 10.50 yuan, down from the previous target of 12.74 yuan, based on a valuation of 15 times PE for 2024 [3][5].