Core Viewpoint - The report highlights that Hoshine Silicon Industry's performance is under pressure due to the downturn in industrial silicon and organic silicon markets, leading to a significant decline in revenue and net profit [1][2][3] Company Performance - In the first half of 2025, Hoshine Silicon achieved revenue of 9.775 billion yuan, a year-on-year decrease of 26.34%, and a net profit attributable to shareholders of -397 million yuan, a year-on-year decline of 140.60% [2] - In Q2 2025, the company reported revenue of 4.548 billion yuan, down 42.11% year-on-year and 13.02% quarter-on-quarter, with a net profit of -657 million yuan, reflecting a year-on-year decline of 245.87% and a quarter-on-quarter decline of 352.93% [2] Industry Analysis - The decline in performance is attributed to falling sales prices of industrial silicon and organic silicon products, with the industrial silicon market experiencing a downward price trend due to supply-demand imbalances [3] - Domestic industrial silicon production in the first half of 2025 was 1.85 million tons, showing a year-on-year decrease, while the production of polysilicon was 597,000 tons, down 44.0% year-on-year [3] - The organic silicon industry saw a consensus on production cuts in Q1, but production increased in Q2, with total domestic DMC production exceeding 1.2 million tons, a nearly 20% year-on-year increase [3] Financial Metrics - The company's R&D expense ratio decreased due to lower material inputs, while net cash flow from operating activities increased by 1987.93% due to reduced production and inventory clearance [4] - The company is accelerating the upgrade of its R&D center, focusing on innovative manufacturing technologies and smart production models, aiming to enhance its competitive edge in the silicon-based materials sector [5] Profit Forecast - Due to the decline in product prices, the profit forecast for Hoshine Silicon has been slightly adjusted, with expected net profits for 2025, 2026, and 2027 at 1.024 billion yuan, 1.889 billion yuan, and 2.113 billion yuan respectively [6] - The current stock price corresponds to P/E ratios of 60.8, 33.0, and 29.5 for the respective years, with a maintained "buy" investment rating due to the company's leading position in the organic silicon and silicon carbide industries [6]

Core Viewpoint - The company faced operational pressure in the first half of 2025 due to challenges in the industrial silicon, organic silicon, and photovoltaic sectors, resulting in a decline in performance despite a significant increase in cash flow from operating activities [1][8]. Organic Silicon Business - The organic silicon market is expected to recover, with the company positioned to benefit from this rebound due to its leading market position and the anticipated increase in demand from sectors like real estate, photovoltaics, and new energy vehicles [2]. - The industry is projected to see an increase in operating rates from 67% in 2024 to 76% in 2025 and 83% in 2026, indicating a gradual improvement in supply-demand dynamics [2]. Industrial Silicon Business - The company has a significant cost advantage and resource superiority in the industrial silicon sector, focusing on optimizing resource allocation and enhancing product quality while reducing production costs [4]. - The industrial silicon prices have started to rebound after hitting a low in June, with expectations for prices to stabilize within a reasonable range as market demand improves [4]. Silicon Carbide Business - The company is extending its silicon-based new materials industry chain, with a focus on silicon carbide (SiC) products, which are crucial for domestic semiconductor self-sufficiency [5]. - The company has achieved leading production metrics in silicon carbide substrates, with 6-inch substrates in full production and 8-inch substrates in small batch production [5][6]. Research and Development - The company invested 1.79 billion yuan in R&D in the first half of 2025, maintaining a leading position in the industry in terms of research intensity and technological advancement [6]. Future Outlook - The company is optimistic about the second half of 2025, anticipating stable capacity in the organic silicon market and continued demand growth in emerging sectors such as electric vehicle battery sealing and 5G base station cooling [7]. - The photovoltaic industry is undergoing significant adjustments, with government interventions expected to facilitate a return to healthy development, positively impacting the upstream industrial silicon market [7]. Financial Performance - The company reported a significant increase in net cash flow from operating activities, reaching 35.24 billion yuan, a year-on-year growth of 1987.93%, indicating strong cash flow management during industry downturns [1][8]. - The company has also initiated a bond issuance to optimize its funding structure and support ongoing operations and new business ventures [8].