Event: The company publishes its report for the first quarter of 2024. With 2024Q1, the company achieved revenue of 258 million yuan, a year-on-year increase of 6.99%; achieved net profit of 95.1 million yuan, an increase of 0.22% over the previous year; realized net profit of 74.38 million yuan after deduction, a year-on-year decrease of 16.91%.
The 24Q1OLED industry's off-season was strong, and the company's materials revenue increased sharply year on month. Based on the ongoing orders for the company's OLED evaporation source equipment business, we believe that the order for 28 sets of evaporation sources signed by the company with Tianma in Xiamen in March '23 (the total contract amount is about 129 million yuan) confirmed the vast majority of revenue in 24Q1. Combined with revenue confirmation from some of the company's original parts orders, we expect 24Q1's equipment-side revenue to be about 120-130 million yuan, then 24Q1's materials-side revenue will be about 13—140 million yuan. Based on this, we expect 24Q1's materials-side revenue to increase 97%-112% year over year and 35%-45% month on month. We believe that the reason why 24Q1's materials-side revenue has increased significantly is that the penetration rate of OLED organic materials in clients has increased, the second is that OLED panel manufacturers bucked the trend in overall panel shipments during the Q1 off-season, and the three companies provided increased revenue from new material categories such as packaging materials and PSPI. In terms of expenses, the 24Q1 company's total expenses increased 7.7% year on year, and the cost ratio for the period increased slightly by 0.13 pct to 19.42% year over year.
OLED materials were successfully introduced by customers, and device-side orders were obtained steadily. In terms of OLED-related materials, G', R', and B' materials have completed production line introduction and stable supply; packaging materials have been stably supplied to production lines; and PSPI materials have passed mass production tests by some customers and delivered in batches. The red and green light-emitting layer materials are being verified by customers. Some materials have already been verified, and it is expected that stable supply will be achieved in the future. In terms of OLED evaporation source orders, the company's subsidiary Shanghai Shengyi won the bid for Chongqing BOE's sixth-generation AMOLED multilayer transformation project at the end of September 2023, and won the bid for Mianyang BOE's sixth-generation AMOLED (flexible) production line project in January 2024. Up to now, contracts have been signed for the above two evaporation source equipment projects. Furthermore, with the superposition of multiple factors such as 5G and the Internet of Things, the OLED penetration rate in the mid-size IT and automotive markets has gradually increased, and panel manufacturers such as BOE have already laid out high-generation OLED production lines. Under the trend of domestic high-generation OLED production line construction, the company, as the leading domestic linear evaporation source, will clearly benefit.
Profit forecasting, valuation and ratings: Benefiting from the rising trend in the OLED industry, demand for OLED materials continues to rise, and 24Q1's OLED materials revenue maintained a high growth rate. We maintain the company's 24-25 profit forecast and add a 26-year profit forecast. The company's net profit for 24-26 is estimated to be 204 million yuan, 3.29 million yuan, and 433 million yuan, respectively.
We continue to be optimistic about the company's subsequent development as a leader in the domestic OLED organic materials and OLED evaporation equipment industry, and maintain a “buy” rating.
Risk warning: New product introduction risk, OLED material release falling short of expectations, product development risk, downstream demand falling short of expectations.