First(SH:603806) Changjiang Securities·2024-09-12 02:13Investment Rating - The investment rating for the company is "Buy" and it is maintained [4]. Core Insights - The company reported a revenue of 10.764 billion yuan for H1 2024, representing a year-on-year growth of 1.39%. The net profit attributable to the parent company was 928 million yuan, up 4.95% year-on-year. In Q2 2024, the revenue was 5.442 billion yuan, a year-on-year decline of 4.57% but a quarter-on-quarter increase of 2.27%. The net profit for Q2 was 407 million yuan, down 21.79% year-on-year and 21.97% quarter-on-quarter. The company also experienced credit impairment losses of 200 million yuan and asset impairment losses of 60 million yuan in Q2, but after adjustments, the operating performance exceeded 600 million yuan, significantly better than expected [5][6]. Summary by Sections Revenue and Profitability - For H1 2024, the company achieved a revenue of 10.764 billion yuan, with a year-on-year increase of 1.39%. The net profit attributable to the parent company was 928 million yuan, reflecting a growth of 4.95%. In Q2 2024, the revenue was 5.442 billion yuan, showing a year-on-year decline of 4.57% but a quarter-on-quarter increase of 2.27%. The net profit for Q2 was 407 million yuan, down 21.79% year-on-year and 21.97% quarter-on-quarter [5][6]. Business Segments - In the film business, the company sold 1.39 billion square meters in H1 2024, a 44% increase year-on-year, indicating a continued rise in market share. The Q2 net profit per watt is expected to improve quarter-on-quarter due to strong component production in March-April and rising film prices. Although film prices fell in May-June due to weakening demand, the company demonstrated strong cost control capabilities, limiting the impact on profitability [6]. Financial Health - The company reported credit impairment losses of 200 million yuan and asset impairment losses of 60 million yuan in Q2. The expense ratio for H1 2024 was 4.87%, with Q2 at 5.33%, which is considered reasonable. The company had a good cash collection, with operating cash inflow of 940 million yuan in Q2. As of the end of Q2, accounts receivable and notes totaled 5.126 billion yuan, with a quarter-on-quarter increase of only 8%. The company had 4.1 billion yuan in cash on hand and a debt-to-asset ratio of only 26.7%, indicating a significantly stronger balance sheet compared to peers [5][6]. Market Position and Outlook - After two years of market competition pressure, second and third-tier film companies and potential new entrants have significantly slowed down in expansion and financing. As a leading enterprise, the company has shown strong control over market dynamics. Looking ahead, film production and prices are expected to stabilize in September, and with the increase in component production, film demand is anticipated to recover, suggesting a potential turning point in the cycle. The rapid iteration of film products driven by battery technology changes in the next two years is expected to further enhance the company's advantages in formulations and equipment, consolidating market share while improving profitability [6]. Profit Forecast - The company is expected to achieve profits of 2 billion yuan and 2.7 billion yuan in 2024 and 2025, respectively, corresponding to price-earnings ratios of 18 and 13 times [6].