LONGi Green Energy Technology Earnings: Cut Fair Value Estimate by 7% to CNY 29.30 on Shipment Miss

LONGi’s share price saw little reaction after it reported second-quarter earnings that grew 45% year on year and were in line with the preliminary figures provided in early August. However, we are disappointed that its solar module and wafer shipments in the first half only reached 31% and 40% of its full-year targets, respectively. While we expect sequentially higher shipments in the second half, we do not think LONGi can meet its full-year shipment target. After reducing our shipment assumptions, we cut our 2023 earnings forecast to CNY 16.0 billion from CNY 18.3 billion. We also lower our five-year earnings CAGR to 16.5% from 17.7% through 2027. Accordingly, we reduce our fair value estimate to CNY 29.30 from CNY 31.40. The shares closed 9% below our fair value estimate, but we would prefer a higher margin of safety.