Description of the event
The company released its annual report for the first quarter of 2024, achieving revenue of 202 million yuan, an increase of 39.46% year on year; realized net profit of 52 million yuan, an increase of 79.94% year on year; net profit after deducting non-return to mother was 46 million yuan, an increase of 99.97% year on year; and basic earnings per share was 0.28 yuan.
Incident reviews
The company's Q1 revenue and net profit increased significantly year-on-year, and high-end production capacity was optimized to optimize the product structure. Downstream application prosperity rebounded in the first quarter. The company's sales orders increased, and sales revenue increased 39.46% year over year and 0.72% month over month. The company keeps an eye on trends and market demand in downstream fields such as epoxy encapsulants, electronic circuit substrates, and thermal interface materials, and continues to follow up R&D investment; Q1 R&D investment was 0.13 billion yuan, an increase of 34.62% over the previous year, accounting for 6.42% of revenue. High-end production capacity such as ultra-pure, ultra-fine, low-α spherical silicon, and aluminum balls continued to be expanded, and the sales structure was continuously optimized, so that the company's net profit growth rate was greater than the revenue growth rate. Q1 net profit to mother increased 79.94% year-on-year and 5.12% month-on-month.
Lower LNG prices have boosted the company's gross profit and continued to benefit from the recovery in downstream demand. Product structure optimization combined with lower LNG prices increased the company's gross profit; the 2024Q1 company's comprehensive gross margin was 40.71%, up 4.13 pcts year on year and 3.16 pct month on month; net margin was 25.55%, up 5.75 pcts year on year, and 1.07 pct month on month. According to data from the National Bureau of Statistics, the average price of LNG in the first quarter was 4527.03 yuan/ton, down 13.55% from the previous quarter, reducing the cost of the company's fused silica powder. According to DRAMexchange data, the average price of NAND flash memory in the first quarter increased 0.13% from the previous quarter; the average price of DRAM increased 2.33% from the previous quarter. As downstream demand improves and the company continues to expand in the high-end market, the company's performance is expected to continue to grow.
Investment advice
The company's 2024-2026 EPS is expected to be 1.30\ 1.68\ 2.04, corresponding to the company's closing price of 43.30 yuan on April 24, and the 2024-2026 PE is 33.4\ 25.8\ 21.2, respectively, maintaining a “buy-B” rating.
Risk warning
Market development falls short of expectations; raw material prices fluctuate greatly; capacity construction progress falls short of expectations; technology loss or loss of core technicians, etc.