Q3 performance is in line with expectations, profit is under pressure, maintain "buy" rating company released 2023 third quarter report, the first three quarters revenue 932 million yuan, year-on-year-21.61%; return mother net profit 98 million yuan, year-on-year-53.12%; deducted non-net profit 87 million yuan, year-on-year-56.01%; of which Q3 revenue 316 million yuan, year-on-year + 8.31%, month-on-month-7.63% The net profit is 39.77 million yuan, 17.17% year-on-year and-10.09% compared with the same period last year, while the non-net profit is 35.21 million yuan, 21.19% year-on-year and-14.37% month-on-month. The performance is basically in line with expectations. According to the prosperity of the company's main business and the situation of production and marketing, we cut by 2023 and maintain the profit forecast for 2024-2025. it is estimated that the net profit of 2023-2025 will be 1.56 yuan, 3.16 yuan and 392 million yuan per share, corresponding to 1.13 yuan per share, 2.30,2.85 yuan per share, and the current stock price corresponds to 29.1,14.4,11.6 times of PE in 2023-2025. We are optimistic that the company, relying on continuous R & D and innovation, high-quality customer structure, deep ploughing display materials, pharmaceutical CDMO, electronic chemicals and so on, will have sufficient growth momentum in the future and maintain its "buy" rating.

Q3 sales gross profit margin increased month-on-month, sales expense rate, management expense rate dragged down the net interest rate performance in the first three quarters of 2023, the difference between the company's net profit and non-net profit is mainly due to the existence of 8.39 million yuan of government subsidies included in the current profit and loss and 4.82 million yuan of investment income. In terms of profitability, the gross profit margin and net profit margin of the company in the first three quarters of 2023 were 34.29% and 10.52%, respectively, which were 37.59% and 12.59% higher than those of Q3 in 2022. Q2 + Q2 respectively. The net sales profit rate was mainly due to the increase of Q3 R & D expense rate and financial expense rate by 2.4% and 1.6% respectively.

The change of control does not affect the stability of the company's production, operation and governance, and the medium-and long-term growth of convertible bonds to expand production and capacity. According to the company announcement, in view of the fact that the change of corporate control has been implemented, although the company has no actual controller, the corporate governance and internal control system is sound and effectively implemented, and the change of control structure will not have a significant adverse impact on the company's production, operation and governance stability. On October 20, 2023, the company received a notice from the Shanghai Stock Exchange that it agreed to resume the review of convertible bonds. The total amount of convertible bonds to be raised will not exceed 1 billion yuan, of which 800 million yuan will be used for the construction of OLED pre-sublimation materials and high-end fine chemicals industry base project (including OLED pre-sublimation materials and intermediates, pharmaceutical intermediates, photoresist and other electronic chemicals), and 200 million yuan for supplementary working capital, so as to provide a reliable production expansion basis for the company's future business development, further consolidate the company's industry position and increase market share.

Risk tips: demand recovery is not as expected, customer orders decline, display technology iteration, exchange rate fluctuations and so on.