Core Viewpoint - The company's performance in the first half of 2025 was below market expectations, primarily due to declining prices and low operating rates in its main products [1] Group 1: Company Performance - In 1H25, the company achieved revenue of 9.776 billion yuan, a year-on-year decrease of 26.34% [1] - The net profit attributable to shareholders was -397 million yuan, a year-on-year decline of 140.60%, resulting in an earnings per share of -0.34 yuan [1] - In Q2 2025, the company reported revenue of 4.548 billion yuan and a net profit of -657 million yuan [1] Group 2: Production and Pricing Trends - In Q2 2025, the production of industrial silicon was 303,000 tons, down 39% year-on-year, while the production of cyclic siloxane was 95,000 tons, down 34% year-on-year [1] - The average prices for industrial silicon and cyclic siloxane fell by 36.2% and 5.2% year-on-year, respectively [1] Group 3: Industry Outlook - The organic silicon price has been fluctuating, with expectations for supply-demand balance to gradually improve in 2025-26 [2] - The organic silicon industry capacity is projected to reach 6.89 million tons by the end of 2024, with 1.2 million tons of new capacity added in 2024 [2] - Due to deteriorating profitability, new capacity additions in 2025 are expected to slow significantly, with minimal new capacity anticipated [2] - Despite pressure on real estate demand, the demand for organic silicon in lithium battery and photovoltaic applications has seen a compound annual growth rate of 14% over the past five years, with a projected growth rate of 5-10% for 2025 [2] Group 4: Price and Demand Dynamics - The industrial silicon average price has declined by 23% to 10,055 yuan per ton in 2025, following a 15% drop in 2024 [3] - Industrial silicon production capacity increased by 3.7% year-on-year to 7.55 million tons, while production fell by 17.6% to 2.18 million tons, indicating a significant drop in industry operating rates [3] - The demand for polysilicon, a major downstream product, has been under pressure, with production from January to July 2025 down 42.5% year-on-year [3] Group 5: Profit Forecast and Valuation - The industry outlook remains bleak, leading to a downward revision of profit forecasts for 2025 and 2026 by 45% and 27%, respectively, to 1.07 billion and 2.56 billion yuan [4] - The current stock price corresponds to a price-to-earnings ratio of 58 and 25 times for 2025 and 2026, respectively [4] - The target price has been reduced by 8% to 60 yuan, with an expected upside of 13% from the current stock price based on a 28 times price-to-earnings ratio for 2026 [4]