1H22 profit alert
LONGi announced profit alert for 1H22 interim results. The company estimates total revenue to reach Rmb50 to 51bn, up 42-45% y-o-y. This represents c.43% of our full year FY22 revenue forecast of Rmb116.4bn. We reckon revenue should be largely in-line as solar installations have historically been weighted more towards the latter half of the year. Solid revenue growth was driven by demand for solar modules, which was especially strong in 2Q22.
The company also expects 1H22 net profit of c.Rmb6.3-6.6bn, up 26-32% y-o-y. This represents c.48-50% of our full-year forecast of Rmbc.13.1bn. Net profit grew slower than revenue as net margins narrowed. LONGi estimates 1H22 net margin should range between 12.6-12.9%, compressing 1.3-1.6ppts y-o-y. However, this is still ahead of our full year FY22 net margin forecast of c.11%.
Our current recommendation on LONGi is BUY with Rmb91 TP.
