LONGi Green Energy Earnings: Fair Value Cut on Lower Shipment, Margin Forecasts; Shares Attractive

While LONGi's first-half CNY 5.2 billion net loss is in line with its preliminary guidance, we anticipate deeper challenges and factor in a prolonged overcapacity in the solar industry. We reduce our assumptions for LONGi’s shipment, average selling price, and gross margin for 2024-28. This leads to a wider 2024 net loss forecast of CNY 9.3 billion from our prior CNY 6.1 billion net loss forecast. We project a turnaround in 2026 but reduce our net income estimates by 32%-76% for 2026-28. As a result, we cut our fair value estimate by 24% to CNY 19.40. Despite the more dire outlook, we like no-moat LONGi at the current price level. We believe its share price has overshot market imbalance challenges.