The Zhitong Finance App learned that Guoxin Securities released a research report saying that the performance of power grid companies in the first half of 2024 generally showed a steady growth trend, and performance flexibility is expected to further improve in the second half of the year as deliveries enter the peak season; with multiple demands such as new energy development, increased electricity consumption, and renovation of old power grids, the power grid investment boom cycle is long, and there is huge room for Chinese companies to increase their overseas penetration rate. Shipments in the lithium battery industry increased in Q2. Looking ahead to the third quarter, demand for terminals will enter a peak season, and shipments in all sectors are expected to rise steadily. In addition, PV companies' performance in the first half of the year was generally under pressure. Looking ahead to the second half of the year, the growth rate of PV installed demand is expected to slow down, profitability in glass, film, silver paste, etc. is under pressure, and inverter companies' shipments are expected to increase further.

The main views of Guoxin Securities are as follows:

The power equipment industry continues to thrive at home and abroad

The performance of power grid companies in the first half of 2024 generally showed a steady growth trend, and performance flexibility is expected to increase further in the second half of the year as deliveries enter the peak season. In the context of the development of new domestic power systems, the urgency of upgrading distribution networks and agricultural grids is increasing. On the overseas side, along with multiple demands such as the development of new energy sources, the increase in electricity consumption, and the renovation of old power grids, the power grid investment boom cycle is long, and there is huge room for Chinese enterprises to increase their overseas penetration rate. The focus is on UHV and distribution network companies with overseas layouts Pinggao Electric (600312.SH), Igor (002922.SZ), Huaming Equipment (002270.SZ), Guodian Nanrui (600406.SH), Siyuan Electric (002028.SZ), and Haixing Electric (603556.SH).

Demand for wind power is expected to improve in the second half of the year

Affected by industry demand and price competition factors, the performance of wind power companies was generally under pressure in the first half of 2024. The performance of companies with a high share of exports showed strong resilience. In the second half of the year, with the month-on-month improvement in domestic demand for land wind and sea wind and the decline in bulk material prices, corporate performance is expected to improve significantly from month to month. Overseas sea breezes are expected to enter the release stage in 2025-2026, and leading domestic submarine cable and pipe pile companies are expected to fully benefit. Domestic onshore fan prices have recovered steadily to form a profit bottom. Demand for wind power in emerging market countries is gradually increasing in the context of energy transformation, and leading domestic companies are opening up space to go overseas with their comprehensive advantages. The focus is on fan companies and leading parts companies that have benefited from overseas orders, such as Goldwind Technology (002202.SZ), Sany Heavy Energy (688349.SH), Sun Moon Co., Ltd. (603218.SH), and China International Union (605305.SH).

Lithium battery industry Q2 shipments increased

Demand for terminals such as electric vehicles, energy storage, and consumer electronics is picking up steadily. Shipments of leading battery companies increased 10% to 60% month-on-month in 2024Q2, and most of these companies have increased significantly month-on-month in energy storage battery shipments. As the operating rate picked up, the net profit of some enterprise units picked up slightly month-on-month; the profitability of companies that mainly ship energy storage batteries was under pressure due to fierce competition.

Shipments of anodes, diaphragms, and lithium iron phosphate cathodes picked up significantly in the second quarter. Shipments of ternary cathodes remained flat or declined slightly from month to month against the backdrop of sluggish overseas demand. In terms of profitability, boosted by a recovery in operating rates, the profitability of units such as lithium iron phosphate and electrolytes stabilized, and profits of some negative electrode companies declined month-on-month due to depreciation. Looking ahead to the third quarter, terminal demand will enter a peak season, and shipments in all sectors are expected to rise steadily. Focus on Zhuhai Guanyu (688772.SH) and Ningde Era (300750.SZ).

PV companies are generally under pressure to report their performance

Polysilicon prices continued to fall in the first half of 2024, and are now lower than the cash costs of first-tier companies; silicon wafer and battery companies were affected by increased competition and insufficient industry demand, and faced overall operating losses; profits of integrated component companies were divided, and companies with relatively high domestic sales reported loss results, and overseas (especially in the US market) companies with high revenue maintained a profit status for the time being.

In terms of auxiliary materials, profits of silicon wafer auxiliary materials such as heat fields, quartz sand and crucibles were under pressure in the first half of the year. The sector's performance declined significantly year-on-year, and the accounts receivable repayment cycle was extended; the revenue of photovoltaic silver paste companies continued to grow but their profitability deteriorated; the overall prices of photovoltaic film and glass auxiliary materials in the module sector showed a downward trend. Although the prices of raw materials were reduced, unit profit declined year-on-year; in terms of inverters, shipments of most inverter companies improved quarterly.

Looking ahead to the second half of the year, the growth rate of PV installed demand is expected to slow down, and the profitability of glass, film, silver paste, etc. is under pressure; profit inflection points in silicon, silicon wafers, cells, components, thermal fields, quartz sand, and crucibles are still to be observed, and inverter companies' shipments are expected to increase further. Focus on Tongwei Co., Ltd. (600438.SH) and Sunshine Power (300274.SZ).

Risk warning: Risk of policy changes; large fluctuations in raw material prices; production and sales of electric vehicles fall short of expectations.