2024Q1's profit level increased sharply month-on-month, optimistic about the company's long-term development. Maintaining the “buy” rating company's 2024 quarterly report, 2024Q1 achieved revenue of 244 million yuan in a single quarter, +7.99% year over year, -5.62% month on month; net profit to mother of 25 million yuan, -5.29% year on year, +277.27% month on month; net profit without return to mother of 0.25 million yuan, -3.54% year on month, +345.10% month on month; gross sales margin of 25.66%, -1.28pcts, month-on-month + 3.10pcts The main reasons for the company's 2024Q1 profit increase are: (1) the company continues to increase its market development efforts; (2) the book value of “deferred income tax assets” formed by the company's Zhenjiang subsidiary deductible losses was reduced at the end of 2023 due to lower income tax rates, thereby increasing income tax expenses.
We maintain the company's profit forecast. We expect net profit to be 1.18/1.41/160 million yuan in 2024-2026, and the current stock price corresponds to PE 46.0/38.6/33.9 times. We are optimistic about the company's long-term development and maintain a “buy” rating.
The ultra-clean high-purity reagent and photoresist supporting reagent business is developing steadily. G5 product verification is progressing smoothly. In terms of revenue, 2024Q1's ultra-clean high-purity reagent products achieved sales revenue of 157 million yuan, +8.39% year-on-year; photoresist supporting reagent products achieved sales revenue of 78 million yuan, +2.70% year-on-year. In terms of sales, 2024Q1's sales volume of ultra-clean high-purity reagent products was 24,600 tons, +21.81% year-on-year; sales volume of photoresist supporting reagent products was 0.72 million tons, +6.90% year-on-year. In terms of price, the average selling price of 2024Q1's ultra-clean and high-purity reagent products was 0.72 million yuan/ton, -11.01% year over year. The main reason was the increase in sales of the company's photovoltaic solar sector products, and the average sales price was relatively low; the average price of photoresist supporting reagent products was 11,300 yuan/ton, or -3.93% year over year.
At present, the Zhenjiang Company has steadily produced G5 grade sulfuric acid, ammonia, and hydrochloric acid, and has sent samples to many mainstream advanced process manufacturers in China. Most of them have passed the tests, and product verification is progressing smoothly.
The company continues to carry out innovative research and development, and new production capacity continues to advance. Future performance growth is expected. The company continues to invest in R&D. The 2024Q1 R&D cost is 12 million yuan, and the R&D cost rate is 4.88%. In terms of production capacity, Jiang Huawei has built an overall production capacity of 235,000 tons/year, the second phase of the Zhenjiang base project has a production capacity of 100,000 tons/year, and plans for the next three phases of the project. It is expected that the capacity utilization rate in 2024 will increase dramatically with customer development and product introduction. As the company continues to be driven by innovation and production capacity expansion continues to advance, the company's future performance growth can be expected.
Risk warning: downstream demand falls short of expectations; capacity release falls short of expectations; customer acquisition falls short of expectations.