Matters:

The company released its 2024 performance report. After preliminary accounting, the company will achieve revenue of 7.411 billion yuan in 2024, a year-on-year increase of -54.62%; net profit attributable to the parent company -2.718 billion yuan, a year-on-year change from profit to loss; The net profit margin attributable to the parent company was -36.68%, a significant year-on-year decrease. Among them, in 2024Q4, the company achieved revenue of 1.406 billion yuan, a year-on-year increase of -59.26% and a month-on-month increase of -1.06%; net profit attributable to the parent company -1.619 billion yuan, a year-on-year increase from profit to loss; The net profit margin attributable to the parent company was -115.16%, a year-on-year decrease.

Comments:

Profitability is at a stage bottom, and impairment in the fourth quarter dragged down performance. The mismatch between supply and demand in the PV industry has led to a continuous decline in the price of polysilicon products, and even fallen below the cash cost of enterprises, and the industry has fallen into a state of loss. Affected by the decline in industry prices, the company made a provision for inventory decline losses in 24Q4 and a long-term asset impairment loss on the production line of old polysilicon units, which had a great impact on the performance in the fourth quarter.

In the fourth quarter, the operating rate was lowered to reduce cash burn, and the cost control ability was excellent. The company achieved polysilicon output of 34,200 tons in 24Q4, -21.4% month-on-month; The sales volume of polysilicon was 42,200 tons, which was basically the same as the previous month.

Under profitability pressure, the company operated at a lower capacity utilization rate of 40%-50% in the fourth quarter, thereby reducing cash burn. Thanks to various measures to reduce costs and increase efficiency, the company's unit cash cost decreased steadily, and the cash cost in 24Q4 was 35.19 yuan/kg (excluding tax), -9.6% month-on-month. Looking ahead to 2025, the company expects polysilicon production to be 25Q1 of 25,000-28,000 tons, and the annual output is expected to be 11-140,000 tons.

The supply and demand of the industry are expected to improve, waiting for the price to recover. Polysilicon manufacturers' utilization rates are still at a low level, and the demand for polysilicon companies is expected to improve significantly month-on-month due to the rush to install and peak season demand resonance after March, with SMM predicting that module production will exceed 50GW in March. With the gradual implementation of industry self-discipline and supply-side policies, and the recovery of industry demand, the price of the industrial chain is expected to continue to rise.

Investment suggestion: Considering the industry's self-discipline and supply-side reform, the company's product quality and cost are leading, and it is expected to take the lead in benefiting from the industry's profit recovery. Based on the performance report, and considering the promotion of industry self-discipline, we adjust the profit forecast, and it is expected that the company's net profit attributable to the parent company in 2024-2026 will be -27.18/7.88/1.236 billion yuan respectively (the previous value is -14.42/22.52/2.736 billion yuan), and the corresponding net assets per share will be 18.79/19.34/19.86 yuan respectively. Referring to the current corresponding valuation level of comparable companies, the company is given 1.4x PB in 2025, corresponding to a target price of 27.08 yuan, and maintains a "recommended" rating.

Risk warning: the demand for photovoltaic installed capacity is less than expected, the company's production capacity release is less than expected, product price competition is intensifying, raw material prices fluctuate, etc.