First(603806)2024-09-29 00:23Investment Rating - The report upgrades the investment rating to "Buy" with a target price of 20.0 CNY per share [5]. Core Views - Foster is a leading player in photovoltaic packaging materials, with a market share of around 50% in photovoltaic film products. The company is also expanding into other new material industries, establishing a second growth curve through its electrical materials and film materials [2][20]. - The company's revenue for the first half of 2024 is 10.764 billion CNY, a year-on-year increase of 1.39%, while the net profit attributable to shareholders is 928 million CNY, up 4.95% year-on-year, indicating steady performance [2][28]. - The demand for photovoltaic films is expected to grow steadily, driven by the increase in global photovoltaic installations and component production, with projected global demand for photovoltaic films reaching 6.067 billion, 7.142 billion, and 7.517 billion square meters from 2024 to 2026 [2][12]. Summary by Sections 1. Leading Position in Photovoltaic Packaging Materials - Foster has maintained a leading market share in photovoltaic films and is rapidly developing its electrical materials and film materials to create a second growth curve [2][20]. - The company has achieved significant revenue growth, with a compound annual growth rate of 37.18% from 2019 to 2023 [28]. 2. Benefits from Technological Iteration and Competitive Landscape - The company benefits from technological advancements in photovoltaic films, which are essential for component packaging, enhancing efficiency and lifespan [2][39]. - The competitive landscape is characterized by a "one strong, many strong" scenario, where Foster is expected to increase its market share due to the financial pressures faced by smaller competitors [2][12]. 3. Multi-Dimensional Advantages - Foster's financial strength is highlighted by its cash reserves of 5.341 billion CNY and a low debt ratio of 27.65%, allowing for business expansion even in challenging market conditions [2][12]. - The company has a significant scale advantage, with a market share of approximately 46.18% in domestic photovoltaic film shipments, which enhances its bargaining power in the supply chain [2][12]. - Technological advantages are evident in the company's continuous investment in R&D, leading to a diverse product matrix that meets various customer needs [2][12]. 4. Development of Electrical Materials and Film Materials - The company has successfully introduced photosensitive dry film and aluminum-plastic film, with significant growth expected in these segments, projecting revenue growth rates of 41.38%, 30.83%, and 27.15% from 2024 to 2026 [2][12]. - The aluminum-plastic film segment is entering a rapid growth phase, with sales expected to reach 10.063 million square meters in 2023, a year-on-year increase of 67.82% [2][12]. 5. Profit Forecast and Investment Recommendations - The report maintains profit forecasts for 2024-2026, estimating net profits of 2.092 billion, 2.968 billion, and 3.566 billion CNY, with corresponding EPS of 0.80, 1.14, and 1.37 CNY [7][8]. - The company is expected to enjoy a higher valuation due to its leading position in the photovoltaic film market, with a target PE of 25 times for 2024 [7].