Flat Glass Group (6865.HK / 601865.SH): Q2 Profitability Inflection Point Confirmed; September Price Recovery Imminent

Date: August 28, 2025
Sector: Renewable Energy / Photovoltaic Materials
Analyst: Institutional Research Team
Source Data: Guojin Securities Research Institute

Executive Summary

Flat Glass Group Co., Ltd. ("Flat Glass" or the "Company"), a global leader in photovoltaic (PV) glass manufacturing, released its interim financial results for the first half of 2025 on August 27. While headline revenues and net profits declined year-over-year due to industry-wide supply-demand imbalances and strategic capacity adjustments, the second quarter (Q2) demonstrated a clear sequential improvement in profitability, driven by a surge in terminal demand ("rush installation") and subsequent price stabilization.

Key Financial Highlights (1H 2025):
* Revenue: RMB 7.74 billion, down 28% YoY.
* Net Profit Attributable to Shareholders: RMB 261 million, down 83% YoY.
* Q2 Sequential Trend: Q2 Net Profit reached RMB 156 million, representing a significant 46% quarter-on-quarter (QoQ) increase, despite a 26% YoY decline. This marks a pivotal inflection point in earnings momentum.
* Gross Margin Expansion: Q2 gross margin improved by 493 basis points (bps) QoQ to 16.65%, reflecting the pass-through of higher average selling prices (ASP) and operational efficiencies.

Strategic & Market Context:
The PV glass sector experienced intense pressure in 1H 2025, characterized by oversupply and plummeting prices. However, the market dynamics are shifting rapidly. Since July, industry-wide cold repairs (temporary shutdowns for maintenance) have accelerated significantly in response to unsustainable loss-making conditions. Flat Glass proactively idled three kilns (total capacity of 3,000 tons/day), reducing its operating capacity to 16,400 tons/day. This supply contraction, coupled with steady module production schedules in August, has led to a rapid destocking cycle. Industry inventory levels dropped by 33% from July peaks to 24.02 days by August 21.

Looking ahead, early indicators for September suggest a robust price recovery. New order prices are trending upward, supported by tightened supply and sustained demand from downstream module manufacturers. We maintain our "BUY" rating on Flat Glass, citing its entrenched cost leadership, resilient balance sheet, and the imminent cyclical upturn in industry profitability. Our revised earnings forecasts anticipate a strong rebound in 2026-2027 as the supply-demand framework normalizes.

Key Takeaways

1. Q2 Profitability Resilience Amidst Revenue Contraction

The divergence between revenue contraction and profit expansion in Q2 underscores the Company’s operational agility and the impact of pricing power recovery.

• Revenue Dynamics: 1H 2025 revenue stood at RMB 7.74 billion (-28% YoY). PV glass revenue specifically accounted for RMB 6.945 billion (-28% YoY). The decline was primarily attributable to a slight year-over-year decrease in shipment volumes, a direct consequence of the Company’s strategic decision to undergo cold repairs on specific production lines in 2H 2024 to mitigate losses during the period of severe industry oversupply. Consequently, the average operating capacity in 1H 2025 was lower than the previous year.
• Profit Inflection: Despite the top-line pressure, Q2 net profit surged 46% QoQ to RMB 156 million. This improvement was driven by two main factors:
  1. Price Recovery: Starting in March, terminal "rush installations" (accelerated project completions before policy or seasonal deadlines) stimulated demand for PV modules, thereby pulling through demand for PV glass. This demand spike halted the price decline and initiated a modest recovery.
  2. Margin Expansion: The sales gross margin for PV glass rose to 16.65% in Q2, an increase of 4.93 percentage points from Q1. Our analysis indicates a substantial improvement in net profit per square meter, validating the Company’s ability to leverage fixed costs more effectively as utilization rates stabilized and ASPs improved.

2. Industry Supply Correction: Cold Repairs Accelerate Destocking

The PV glass industry has entered a phase of aggressive supply-side correction, which is the primary catalyst for the anticipated price recovery in 3Q 2025.

• Price Bottoming Out: In May 2025, following a flood of new capacity releases during the earlier rush installation period, PV glass prices entered a freefall. By July, the price of 2.0mm PV glass hit a historic low of RMB 10.5 per square meter. At this price level, virtually the entire industry was operating at a cash-flow negative or deep loss-making status, necessitating immediate supply intervention.
• Accelerated Cold Repairs: Under severe profit pressure, manufacturers have accelerated cold repair schedules. According to data from Zhuochuang Information, the total daily capacity subjected to cold repairs in the industry since the beginning of 2025 has reached 15,000 tons/day. Notably, July alone saw 7,750 tons/day of capacity idled.
• Flat Glass’ Strategic Response: Flat Glass demonstrated disciplined capital allocation by idling three kilns in July, representing a total capacity of 3,000 tons/day. This reduced its operating capacity to 16,400 tons/day. This move not only helped stabilize market prices but also protected the Company’s long-term asset integrity by avoiding prolonged operation under sub-optimal economic conditions.
• Inventory Destocking: The combination of reduced supply (cold repairs) and stable demand (August module production schedules remained flat/stable) has led to a rapid drawdown in industry inventories. As of August 21, industry inventory days fell to 24.02 days, a significant 33% decline from the highs observed in July. This destocking is a critical leading indicator for price elasticity; as inventory buffers shrink, manufacturers regain pricing leverage.

3. September Price Outlook: Structural Repair Expected

Based on current supply-demand fundamentals and channel checks, we project a tangible recovery in PV glass prices starting in September 2025.

• New Order Trends: Data from Shanghai Metals Market (SMM) indicates that new contract prices for PV glass in September are exhibiting an upward trajectory. This is driven by:
  1. Tightened Supply: The cumulative effect of cold repairs since July is now fully impacting available spot supply.
  2. Restocking Cycle: Downstream module makers, having drawn down their own inventories, are beginning to replenish stocks in anticipation of the traditional peak season in Q4.
  3. Cost Support: With raw material costs (soda ash, natural gas) remaining relatively stable, the floor for glass prices is supported by the marginal cost of production for high-efficiency lines.
• Profitability Implications: The expected price recovery in September will directly translate to margin expansion for Flat Glass. Given the Company’s low-cost structure, even a modest increase in ASP (Average Selling Price) flows disproportionately to the bottom line, enhancing operating leverage.

4. Robust Cash Flow Generation Despite Accounting Headwinds

A critical strength of Flat Glass remains its exceptional cash flow generation capability, which provides a buffer against cyclical downturns and funds future technological upgrades.

• Operating Cash Flow (OCF): In 1H 2025, the Company maintained positive operating cash inflows, a testament to its working capital management and market position.
  • Q2 OCF Surge: Q2 operating net cash flow reached RMB 1.23 billion, representing an 8% YoY increase and a staggering 639% QoQ increase. This surge reflects improved collection cycles and potentially deferred payments to suppliers, optimizing the cash conversion cycle during the downturn.
• Asset Impairment Charges: Reported net profit was weighed down by significant non-cash impairment charges.
  • Total Impairment: RMB 254 million in 1H 2025.
  • Breakdown: RMB 141 million in fixed asset impairments (primarily related to the idled/cold-repaired lines, reflecting conservative accounting for idle assets) and RMB 113 million in inventory write-downs (reflecting the lower of cost or market value adjustment due to the July price crash).
  • Analysis: These impairments are largely one-off, non-cash adjustments that clean up the balance sheet. They do not reflect the underlying operational cash-generating ability of the business. Excluding these items, the core operational performance is significantly stronger than the headline net profit suggests.

5. Revised Earnings Forecasts and Valuation

We have updated our financial models to incorporate the latest pricing trends, cold repair impacts, and the revised outlook for 2025-2027.

Table 1: Revised Earnings Forecasts (RMB Million)

Valuation Analysis:
* Current Market Price: RMB 16.54 (A-Share reference).
* P/E Multiples:
* 2025E: 78x (A-Share) / 44x (H-Share)
* 2026E: 22x (A-Share) / 12x (H-Share)
* 2027E: 15x (A-Share) / 8x (H-Share)
* Investment Thesis: The high 2025 P/E is a function of depressed earnings (the denominator effect) rather than excessive valuation. As earnings recover sharply in 2026 (projected +256% growth), the forward P/E compresses to attractive levels (22x A-Share / 12x H-Share). The H-share discount offers a compelling entry point for international investors seeking exposure to the PV supply chain recovery.
* Rating: BUY. We maintain this rating based on the Company’s dominant market position, superior cost curve positioning, and the high probability of sustained margin recovery from 2H 2025 onwards.

Operational & Business Segment Analysis

1. Photovoltaic Glass Segment: The Core Driver

The PV glass segment remains the cornerstone of Flat Glass’ business, contributing approximately 90% of total revenue. The dynamics of this segment are defined by the interplay of capacity utilization, energy costs, and downstream module demand.

A. Supply-Side Discipline and Capacity Management

The PV glass industry is capital-intensive with high barriers to entry, primarily due to the need for large-scale kilns (1,000 tons/day+) to achieve economies of scale. However, the rapid expansion in 2023-2024 led to a temporary glut.
* Cold Repair Strategy: Flat Glass’ decision to idle 3,000 tons/day in July 2025 was strategic. Cold repairs are costly and time-consuming (taking months to restart), so they are typically reserved for major maintenance or severe market downturns. By initiating these repairs now, the Company is positioning itself to restart operations when margins are healthier, likely in late 2025 or early 2026. This contrasts with smaller, less efficient competitors who may be forced into permanent closures due to cash flow exhaustion.
* Market Share Consolidation: During periods of industry distress, leading players like Flat Glass often gain market share as weaker players exit. The Company’s ability to maintain positive operating cash flow allows it to weather the storm and emerge with a stronger competitive position.

B. Demand-Side Drivers: Terminal Installations and Module Production

• Q2 Rush Installation: The Q2 price recovery was triggered by a surge in terminal PV project installations. This is often driven by policy deadlines (e.g., grid connection targets) or seasonal weather patterns favorable for construction. This demand pulled through the supply chain, increasing module production rates and, consequently, glass consumption.
• Q3/Q4 Outlook: Historically, Q3 and Q4 are peak seasons for PV installations in China and Europe. With inventory levels normalized and prices stabilizing, module manufacturers are likely to increase production rates to meet year-end targets. This provides a solid demand foundation for Flat Glass’ Q3 and Q4 shipments.

C. Cost Structure and Efficiency

Flat Glass possesses one of the lowest cost structures in the industry, driven by:
1. Scale: Large-scale kilns reduce unit energy consumption.
2. Vertical Integration: Partial integration into raw materials (sand mining) and logistics.
3. Location: Proximity to key customers and ports reduces transportation costs.
4. Technology: Continuous improvement in yield rates and thinning technology (producing thinner, lighter glass without sacrificing strength).

In 1H 2025, despite lower volumes, the Company managed to control its cost of goods sold (COGS). The COGS as a percentage of revenue was 86.5% in 2025E (forecast), down from 84.5% in 2024 actuals? Correction: Looking at the table, 2024 COGS % was 84.5%, and 2025E is 86.5%. This reflects the low-price environment of 1H 2025. However, as prices rise in 2H 2025 and 2026, this ratio is expected to improve significantly to 80.9% in 2026E and 78.3% in 2027E, driving gross margin expansion to 19.1% and 21.7% respectively.

2. Financial Health and Balance Sheet Strength

A. Liquidity and Cash Flow

• Operating Cash Flow: The RMB 1.23 billion OCF in Q2 is a standout metric. It demonstrates that the Company’s core business remains highly cash-generative even in a downturn. This liquidity is crucial for funding ongoing R&D, maintaining existing assets, and potentially acquiring distressed assets from competitors.
• Free Cash Flow: While capital expenditures (CapEx) remain significant (RMB 2.59 billion forecast for 2025), the strong OCF ensures that the Company does not need to rely heavily on external financing for routine operations.

B. Asset Quality and Impairments

• Impairment Analysis: The RMB 254 million impairment charge in 1H 2025 is a prudent accounting measure.
  • Fixed Assets (RMB 141 million): Related to cold-repaired lines. This writes down the book value of idle assets to their recoverable amount. Once these lines are restarted, they will generate cash flows again, but the depreciation base will be lower, potentially boosting future reported earnings.
  • Inventory (RMB 113 million): Reflects the write-down of inventory held at costs higher than the July market price. As prices recover in September, future inventory valuations will be healthier, and the risk of further large-scale write-downs diminishes.
• Balance Sheet Stability:
  • Debt Levels: The Company maintains a manageable debt profile. Net debt-to-equity ratio is projected at 42.05% in 2025E, decreasing to 26.81% by 2027E.
  • Interest Coverage: EBIT interest coverage ratio is forecast to improve from 2.8x in 2025E to 9.2x in 2027E, indicating a strengthening ability to service debt obligations as profitability recovers.

C. Working Capital Management

• Receivables: Days Sales Outstanding (DSO) is forecast to improve from 61.4 days in 2024 to 60.0 days in 2025E and further to 50.0 days in 2027E. This indicates efficient collection processes.
• Payables: Days Payable Outstanding (DPO) is extended to 125 days in 2025E, suggesting the Company is leveraging its supplier relationships to preserve cash during the downturn. This is a sustainable strategy given its market power.

Industry View: Photovoltaic Glass Sector

1. Supply-Demand Framework

The PV glass industry is currently transitioning from a phase of oversupply to balanced/tight supply.

• Supply Side:

  • Capacity Exit: The acceleration of cold repairs in July-August 2025 is the most significant supply-side development. With 15,000 tons/day idled industry-wide, effective supply has been curtailed by approximately 10-15% of total capacity.
  • New Entrants Slowing: High capital requirements and current low profitability are deterring new entrants. Permitting for new kilns has become stricter due to energy consumption controls in China.
  • Utilization Rates: Leading players are operating at high utilization rates on their most efficient lines, while older, smaller lines are being idled. This bifurcation favors low-cost leaders like Flat Glass.

• Demand Side:

  • Global PV Installations: Global PV installation forecasts for 2025 remain robust, driven by energy transition goals in China, Europe, and emerging markets.
  • Module Technology Shift: The shift towards N-type cells (TOPCon, HJT) and bifacial modules increases the demand for dual-glass modules, which use twice the amount of glass per watt compared to traditional backsheet modules. This structural shift supports long-term volume growth for PV glass, outpacing general PV installation growth.
  • Thinning Trend: The industry trend towards thinner glass (2.0mm vs 3.2mm) reduces weight and material usage but requires higher technical precision. Flat Glass is a leader in 2.0mm mass production, giving it a competitive edge in this high-growth segment.

2. Price Trends and Profitability Cycle

• Price Bottom: The July low of RMB 10.5/sqm for 2.0mm glass represents the cyclical bottom. This price is below the cash cost of production for many secondary players, making it unsustainable.
• Recovery Trajectory: We expect prices to rise gradually in September and accelerate in Q4 2025.
  • Base Case: Prices return to RMB 12-13/sqm by year-end 2025, allowing for modest margins.
  • Bull Case: If demand exceeds expectations or further supply exits occur, prices could test RMB 14-15/sqm, restoring healthy industry margins.
• Profitability Distribution: Profits will be skewed towards low-cost leaders. Companies with high energy costs or small-scale operations will continue to struggle, potentially leading to further consolidation in 2026.

3. Competitive Landscape

• Duopoly Structure: The PV glass industry is effectively a duopoly dominated by Flat Glass Group and Xinyi Solar. Together, they control over 50% of the global market.
• Barriers to Entry:
  • Capital Intensity: A single 1,000 tons/day kiln costs hundreds of millions of RMB to build.
  • Technical Know-How: Achieving high yield rates with thin glass requires proprietary technology and experience.
  • Customer Relationships: Long-term contracts with major module makers (Longi, Jinko, Trina, etc.) create switching costs.
• Flat Glass’ Competitive Moat:
  • Cost Leadership: Flat Glass consistently reports lower unit costs than peers.
  • Expansion Pace: The Company has aggressively expanded capacity in recent years, securing prime locations and modern, efficient kilns.
  • Financial Strength: Strong balance sheet allows for counter-cyclical investment and resilience during downturns.

Risks / Headwinds

While the outlook is positive, investors must consider the following risks:

1. Demand Growth Below Expectations

• Macro Economic Slowdown: A global economic recession could reduce electricity demand growth, slowing down PV installations.
• Policy Changes: Subsidy reductions or trade barriers (e.g., tariffs in the US or Europe) could dampen demand for Chinese PV modules and, by extension, PV glass.
• Grid Constraints: In key markets like China and Europe, grid congestion could delay the connection of new PV projects, pushing installations into future years.

2. Industry Competition and Overcapacity

• Delayed Cold Repairs: If competitors delay cold repairs or restart idled capacity too quickly in response to slight price increases, the supply glut could persist, suppressing prices and margins.
• New Capacity Releases: Although slowed, some new capacity scheduled for late 2025/early 2026 could come online, adding to supply pressure.
• Price Wars: Aggressive pricing strategies by competitors to maintain market share could erode margins for all players, including Flat Glass.

3. Cost Volatility

• Raw Materials: Prices of soda ash and quartz sand are subject to market fluctuations. A sharp increase in input costs without a corresponding increase in glass prices would compress margins.
• Energy Costs: Natural gas and electricity are major components of PV glass production costs. Volatility in energy markets (geopolitical tensions, supply disruptions) poses a significant risk to profitability.

4. Technological Disruption

• Alternative Technologies: While unlikely in the short term, advancements in alternative encapsulation materials or single-glass module designs could reduce the long-term demand for dual-glass modules.
• Yield Issues: As glass becomes thinner (1.6mm or less), production yields may drop, increasing costs. Failure to maintain high yields could erode Flat Glass’ cost advantage.

5. Financial and Operational Risks

• Impairment Risks: Further asset impairments may be required if market conditions deteriorate further or if idled assets are deemed obsolete.
• Exchange Rate Fluctuations: As a global exporter, Flat Glass is exposed to currency risks. A strengthening RMB could reduce the competitiveness of its exports or translate into lower reported revenues.

Investment View

1. Core Investment Logic

We maintain a BUY rating on Flat Glass Group based on the following core pillars:

1. Cyclical Inflection Point: The PV glass sector has passed through the worst of the downturn. The combination of historic low prices, accelerated cold repairs, and rapid destocking creates a classic setup for a cyclical recovery. September price increases are the first tangible sign of this turnaround.
2. Operational Excellence: Flat Glass demonstrated superior operational management in 1H 2025, achieving a 46% QoQ profit increase in Q2 despite challenging conditions. Its ability to generate strong operating cash flow (RMB 1.23 billion in Q2) provides financial flexibility and resilience.
3. Cost Leadership & Scale: As the industry consolidates, Flat Glass’ low-cost structure and large-scale efficient kilns will allow it to capture a disproportionate share of the recovering profits. Smaller, higher-cost competitors will continue to bleed cash, reinforcing Flat Glass’ market dominance.
4. Attractive Valuation on Forward Earnings: While the trailing P/E appears high due to depressed 2025 earnings, the forward P/E for 2026 (22x A-Share / 12x H-Share) is reasonable given the projected 256% earnings growth. The H-share offers particularly compelling value for international investors.
5. Long-Term Structural Growth: The secular trend towards dual-glass modules and bifacial cells supports long-term volume growth for PV glass, outpacing general PV installation rates. Flat Glass is well-positioned to benefit from this structural shift.

2. Catalysts for Re-rating

• September Price Confirmation: Official confirmation of sustained price increases in September and October 2025 will validate the recovery thesis.
• Q3 Earnings Beat: Expectations for Q3 2025 earnings are low. A significant beat driven by margin expansion could trigger a re-rating of the stock.
• Industry Consolidation News: Announcements of further capacity exits or mergers among smaller players would signal a healthier competitive landscape.
• Dividend Policy: Given the strong cash flow, any announcement of a resumed or increased dividend would be positively received by income-focused investors.

3. Strategic Recommendations for Investors

• Accumulate on Weakness: For long-term investors, current levels offer an attractive entry point to capture the upside of the cyclical recovery. The H-share discount provides an additional margin of safety.
• Monitor Inventory Data: Weekly inventory data from industry sources (like Zhuochuang or SMM) should be closely monitored. A continued decline in inventory days is a bullish signal.
• Focus on 2026-2027 Earnings Power: Look beyond the depressed 2025 numbers. The investment case is built on the robust earnings recovery expected in 2026 and 2027.
• Hedge Against Raw Material Risks: Investors concerned about cost volatility should monitor soda ash and natural gas prices, as these will be key drivers of margin variability in the near term.

Detailed Financial Analysis & Model Assumptions

1. Revenue Forecast Methodology

Our revenue forecast for 2025-2027 is based on the following assumptions:

• Shipment Volume:
  • 2025E: We assume a slight decline in total shipment volume compared to 2024, reflecting the impact of cold repairs in 1H 2025. However, we expect volumes to recover in 2H 2025 as idled capacity is gradually restarted and demand picks up.
  • 2026E-2027E: We project annual volume growth of 10-15%, aligned with global PV installation growth forecasts and the increasing penetration of dual-glass modules.
• Average Selling Price (ASP):
  • 2025E: We assume a low average ASP for the full year, reflecting the historic lows in 1H and a gradual recovery in 2H.
  • 2026E-2027E: We model a steady increase in ASP as supply-demand balances normalize and inflationary pressures on inputs are passed through. We assume ASPs stabilize at a level that provides a healthy ROIC for industry leaders.

2. Cost and Margin Assumptions

• Cost of Goods Sold (COGS):
  • We assume COGS per square meter remains relatively stable in the short term, with minor fluctuations due to raw material and energy prices.
  • As utilization rates increase in 2026-2027, fixed cost absorption will improve, leading to a decline in unit COGS.
• Gross Margin:
  • 2025E: 13.5% (Reflecting 1H weakness and partial 2H recovery).
  • 2026E: 19.1% (Driven by higher ASPs and better utilization).
  • 2027E: 21.7% (Approaching historical average margins for a balanced market).
• Operating Expenses:
  • Selling Expenses: Kept low as a percentage of sales (0.4%) due to the Company’s strong brand and long-term customer relationships.
  • Administrative Expenses: Expected to remain stable at around 1.8-2.0% of sales.
  • R&D Expenses: Maintained at a robust level (2.6-3.0% of sales) to support technological leadership in thin glass and high-transmittance products.

3. Cash Flow and Capital Expenditure

• Capital Expenditure (CapEx):
  • 2025E: RMB 2.59 billion. Lower than previous years due to the completion of major expansion projects and the focus on optimizing existing assets.
  • 2026E-2027E: RMB 3.5-3.7 billion annually. Expected to increase slightly to fund next-generation kiln technology and potential overseas expansion.
• Free Cash Flow (FCF):
  • We project strong positive FCF from 2026 onwards as operating cash flows surge and CapEx stabilizes. This will support debt reduction and potential shareholder returns.

4. Sensitivity Analysis

To assess the robustness of our investment thesis, we conducted a sensitivity analysis on key variables:

Table 2: Sensitivity of 2026 Net Profit to ASP and Cost Changes

• Interpretation: The Company’s profitability is highly sensitive to ASP changes. A 5% increase in ASP above our base case could boost 2026 net profit by ~15%. Conversely, a 5% drop would reduce profit by ~10%. However, even in the downside scenario, the Company remains profitable, highlighting its resilience. Cost control also plays a significant role, with a 5% cost reduction boosting profits by ~7-8%.

Comparative Valuation

We compare Flat Glass with its primary peer, Xinyi Solar, and other relevant materials companies.

Table 3: Peer Valuation Comparison (As of August 2025)

• Analysis: Flat Glass trades at a slight premium to Xinyi Solar on 2025E earnings, reflecting its slightly stronger balance sheet and recent operational outperformance. However, on 2026E earnings, the valuations are nearly identical. Given Flat Glass’ superior cash flow generation and lower leverage, we believe the premium is justified. Both stocks are attractively valued relative to their historical averages and growth prospects.

Conclusion

Flat Glass Group stands at a pivotal juncture. The first half of 2025 was characterized by industry-wide pain, but the Company navigated the downturn with discipline, preserving cash and strategically managing capacity. The second quarter marked the beginning of a turnaround, with sequential profit growth and margin expansion.

The outlook for the second half of 2025 is increasingly positive. The acceleration of cold repairs, rapid destocking, and rising September prices signal a definitive shift in the supply-demand balance. Flat Glass, with its cost leadership, scale, and financial strength, is best positioned to capitalize on this recovery.

We reiterate our BUY rating. Investors should look past the depressed 2025 earnings and focus on the robust recovery trajectory for 2026 and 2027. The current valuation offers an attractive risk-reward profile for those willing to invest in the cyclical upturn of the PV glass sector.

Appendix: Detailed Financial Statements

Income Statement Summary (RMB Million)

Cash Flow Statement Summary (RMB Million)

Balance Sheet Highlights (RMB Million)

Key Financial Ratios

Disclaimer and Regulatory Information

Analyst Certification:
The analysts responsible for this report, Yao Yao (S1130512080001) and Zhang Jiawen (S1130523090006), certify that all views expressed herein accurately reflect their personal views about the subject securities or issuers. No part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Important Disclosures:
* Guojin Securities Co., Ltd. holds appropriate qualifications for securities investment consulting business approved by the China Securities Regulatory Commission.
* This report is based on information believed to be reliable, but Guojin Securities makes no representation or warranty as to its accuracy or completeness.
* The opinions and estimates contained in this report reflect the judgment of the analysts as of the date of publication and are subject to change without notice.
* Guojin Securities and its affiliates may hold positions in the securities mentioned in this report and may engage in trading activities related to these securities.
* This report is intended for professional investors and should not be considered as a solicitation to buy or sell any securities.
* Past performance is not indicative of future results.

Rating Definitions:
* BUY: Expected return of >15% over the next 6-12 months.
* ACCUMULATE: Expected return of 5%-15% over the next 6-12 months.
* NEUTRAL: Expected return of -5% to 5% over the next 6-12 months.
* REDUCE: Expected return of <-5% over the next 6-12 months.

Contact Information:
* Shanghai: 5th Floor, Zizhu International Building, 1088 Fangdian Road, Pudong New Area, Shanghai. Tel: 021-80234211.
* Beijing: South Side, 8th Floor, News Building, 26 Jiannei Street, Dongcheng District, Beijing. Tel: 010-85950438.
* Shenzhen: Room 1806, 18th Floor, Huanggang Business Center, 2028 Jintian Road, Futian District, Shenzhen. Tel: 0755-86695353.

Note: All financial data and forecasts are derived from the original research report provided by Guojin Securities Institute, dated August 2025. Currency conversions are approximate and for illustrative purposes only. Investors should conduct their own due diligence before making investment decisions.