Key points of investment

Incident: In 2024Q1, the company achieved revenue of 5.321 billion yuan, +8.3%/-10.4%, net profit to mother of 522 million yuan, +43.1%/+24.4% year-on-month, net profit excluding non-return to mother of 516 million yuan, and +49.4%/37.8% year-on-month. The performance slightly exceeded market expectations.

Q1 Shipments increased slightly month-on-month, and profits continued to be strong. The company expects to ship about 680 million square meters in 2024Q1, with a slight increase of 40% + over the same period, and a steady increase in the company's market share; we estimate that the net profit for a single flat is about 0.7 yuan, a slight increase over the previous month, due to the increase in the price of particles, and the price increase of adhesive film; 2024Q2 is expected to remain flat month-on-month, and the profit side is expected to continue to improve. In 2024, we expect the company's shipments to reach 28+ billion square meters, an increase of 25% +.

The new materials business is developing steadily, and photosensitive dry films are expected to increase rapidly. The backboard business is expected to ship 180 million square meters in 2024, an increase of 20%; photosensitive dry film is expected to ship 150 million square meters + in 2024, an increase of 50%. At the same time, the product structure continues to improve to the middle and high-end. Revenue is expected to reach 1 billion yuan in 2024, and the new materials business is blossoming more, gradually contributing to new performance growth points.

The rate declined steadily during the period. The company's 2024Q1 sales/management/R&D/finance expenses were 0.19/0.63/1.79/-0.28 billion yuan respectively. The financial expenses were significantly reduced. The overall period rate was 4.39%, -0.13pct/3.06pct compared to the previous month. The net operating cash flow of 2024Q1 was -0.3 billion yuan, an increase of 950 million yuan over the previous year. The company's repayment control was good. At the end of 2024Q1, the company had 5.38 billion yuan in cash and capital on hand.

Profit forecast and investment rating: We maintain our previous profit forecast. We expect net profit from 2024-2026 to mother of 26.1/32.8/4.10 billion yuan, an increase of 41%/26%/25%, maintaining the “buy” rating.

Risk warning: Increased competition and policies falling short of expectations.