Investment Rating - The report assigns a "Buy" rating to the company, with a target price raised to HKD 14.00 per share, indicating a potential upside of 25% from the current price of HKD 11.19 [5][10]. Core Views - The company's performance in the first half of 2025 was impacted by a decline in photovoltaic glass prices and asset impairments, leading to a revenue drop of 27.66% year-on-year to RMB 77.37 billion and a net profit decline of 82.58% to RMB 2.61 billion [2][8]. - The photovoltaic glass market is showing signs of recovery, with improved pricing expected in September 2025, driven by supply-demand dynamics and a reduction in industry inventory levels [4][9]. - The company is positioned as a leading player in the industry, with advantages in technology and cost, which are expected to facilitate a quicker recovery in profitability compared to peers [4][10]. Summary by Sections Financial Performance - In H1 2025, the company reported a revenue of RMB 77.37 billion, down 27.66% year-on-year, and a net profit of RMB 2.61 billion, down 82.58% year-on-year. Q2 2025 revenue was RMB 36.58 billion, a decrease of 26.41% year-on-year and 10.33% quarter-on-quarter, with a net profit of RMB 1.55 billion, down 79.02% year-on-year but up 46.02% quarter-on-quarter [2][8]. - The gross margin for photovoltaic glass in H1 2025 was 12.31%, a decline of 12.39 percentage points year-on-year, although Q2 showed a near 5 percentage point improvement quarter-on-quarter [8]. Market Outlook - The company has recently cold-repaired three glass furnaces, totaling a daily melting capacity of 3,000 tons, while current production capacity stands at 16,400 tons. The photovoltaic glass pricing is improving, with recent quotes indicating a range of RMB 18.5-19.5 per square meter for 3.2mm single-layer coated glass and around RMB 13 per square meter for 2.0mm [4][9]. - The overall supply-demand structure in the photovoltaic glass industry is beginning to improve, with inventory levels dropping to a reasonable 20 days [4][9]. Valuation - The target price has been increased to HKD 14.00 per share, corresponding to a 23x PE ratio for 2026, reflecting an anticipated valuation uplift as the company navigates through the current cycle [5][10].
福莱特玻璃（06865）：光伏玻璃价格向好，公司盈利改善可期