Tongwei Co Ltd Class A

600438: XSHG (CHN)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	¥31.30	Fjw	Gcqflnb

Tongwei Earnings: Cutting Fair Value Estimate by 15% on Lower Shipment and Margin Forecasts

Cheng Wang

Sep 9, 2024

Tongwei’s first-half CNY 3.1 billion net loss is in line with its preliminary guidance. However, we anticipate a prolonged overcapacity in the solar industry and hence reduce our assumptions for its shipment, average selling price, and gross margin for 2024-28. This leads to a wider 2024 net loss forecast of CNY 6.6 billion from our prior CNY 2.1 billion net loss forecast. We project Tongwei to turn around in 2026 but reduce our net income estimates by 21%-60% for 2026-28. As a result, we cut our fair value estimate by 15% to CNY 21.70 per share. We consider the shares fairly valued.

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