Excluding the impact of last year's pandemic, profitability remains strong. Suntec Energy's first-half revenue increased 1.3 times to 7.751 billion yuan (RMB, the same below), consolidated gross margin increased from 13.2 percentage points to 31.8%, resulting in a sharp rise in earnings of 70,565% to 1.228 billion yuan, and earnings per share of 1.02 yuan. The group was affected by the epidemic in the same period last year, and only earned 50 million yuan in the first quarter and lost nearly 49 million yuan in the second quarter. However, in 2019, the company's full-year profit was only 403 million yuan.

New energy policies or support high prices such as polysilicon. The main source of revenue was polysilicon production, which increased by 1.6 times to 3.532 billion yuan in the first half of the year, accounting for 46% of the revenue, followed by a 1.3 times increase in the revenue of engineering construction contracting (EEC) services to Daysun and wind power plants and systems to 2.999 billion yuan. Although the revenue of the solar and wind power plant operation (BOO) only increased by 61% to $727 million, the gross profit was as high as $519 million, accounting for about 21% of the gross profit, and the polysilicon production accounted for 64% of the gross profit.

Xinte's third-quarter results, announced at the end of this month, were promising. Mainland polysilicon production in the first half of the year was about 227,000 tons, an annual increase of 11%, while the average price of single crystal dense material rose from 87,200 yuan per ton in January to 212,400 yuan in June, and the sales volume of polysilicon rose 36% per year to 35,400 tons in the new special period, with an average price of nearly 100,000 yuan per ton. Mainland media revealed that the relevant price recently rose to the level of 271,000 yuan, and the third quarter results announced by Xinte at the end of the month are worth looking forward to.

Technical signals improve, pay attention to industry competition or intensification. The 10-day, 20-day and 50-day antenna convergence and a buy signal from the MACD technical indicator helped the stock test the September high. However, we should also pay attention to the increase in investment by mainland enterprises in PV and polysilicon, which will increase future supply, thereby putting pressure on prices. Although the valuation is at a high level in the past, it is believed that the demand side can still support its valuation level, and it is recommended to buy at 22 yuan, look up at 27.4 yuan, and fall through 18 yuan to stop the loss.

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