Jacques Technology released the 2024 semi-annual report performance forecast. The company expects 2024H1 to achieve net profit of 0.51-0.58 billion yuan, a year-on-year increase of 50.0%-70.0%, and a net profit of 0.52-0.59 billion yuan after deduction, a year-on-year increase of 48.5%-68.0%. Looking at the 24Q2 single quarter, the net profit to mother was 0.27-0.33 billion yuan, up 58.3%-98.8% year-on-year, and 8.1%-35.8% month-on-month, achieving net profit without deduction of 0.28-0.35 billion yuan, up 42.7% to 77.6% year on year, 17.0% to 45.6% month on month. The company achieved high profit growth in 24H1, mainly benefiting from increased sales of LNG sheets, electronic materials, and display panel materials and ancillary products.

LNG sales have increased significantly. LNG composite board is the core material for transport vessels, and the competitive landscape is excellent. As the first domestic manufacturer of LNG insulation panels certified by the French GTT Company and the Classification Society, Yakke Technology has established cooperation with large domestic shipbuilders, and has sufficient orders in hand, contributing to the steady growth of long-term profits. The company's project to localize LNG storage using reinforced insulation composites has begun to bear fruit. The construction of the second insulation board plant has basically been completed, and large-scale production has already been carried out. The company has more than 40 patents, independently developed RSB and FSB secondary shielding materials, completed the construction of an intelligent production line and successfully carried out trial production, and the certification of related products is progressing smoothly by GTT. Increased market demand for liquefied natural gas (LNG) as a clean energy source led to an increase in orders for large LNG carriers, fuel tanks, and engineering installations, and sales of LNG cryogenic insulation composite panels increased dramatically.

The operating rate of the memory chip industry is gradually picking up, and the precursor business continues to grow. The company's semiconductor precursor product technology is leading, and has become a supplier of precursor materials for many leading domestic and foreign semiconductor chip manufacturers such as Samsung Electronics, TSMC, and SMIC, and has basically achieved comprehensive coverage of a large 12-inch customer base.

With the gradual restoration of the operating rate of the integrated circuit manufacturing industry in 2024, as well as the rapid development of artificial intelligence, big data, and cloud computing, domestic integrated circuit production lines and production capacity growth, and downstream product categories such as storage and logic chips, and high-bandwidth memory (HBM) for AI grew rapidly, and 24H1 achieved significant growth in semiconductor electronic materials sales.

Downstream demand continued to recover, and sales of materials and ancillary products for display panels increased markedly. The company's photoresist products mainly include RGB color photoresists, positive TFT photoresists, CNT antistatic materials, and photoresist supporting reagents. The company has made breakthrough progress in developing its own low-temperature photoresists for OLEDs and photoresists for advanced packaging, and has entered the client testing and introduction stage. In 2023, the company also expanded OCPS photoresist, further improved the photoresist product line, and enhanced its comprehensive service capabilities for customers. The company continued to provide products and services to the world's leading panel manufacturers such as BOE, Huaxing Optoelectronics, Huke, Samsung Electronics, and LG. The display panel industry recovered in 2024. Coupled with the increase in the popularity rate of OLED display electronic products, and the 2024 Olympics led to a consumer renewal of display electronics products, the company's sales of materials and supporting products for 24H1 display panels increased markedly.

Profit forecast and investment suggestions: We expect Yaktech to achieve revenue of 6.972/9.121/10.965 billion yuan in 2024-2026, and net profit of 1.061/1.551/2.029 billion yuan, corresponding to PE30/21/16x, maintaining a “highly recommended” rating.

Risk warning: Downstream demand falls short of expectations, progress in new product development and customer introduction falls short of expectations, and international trade frictions increase risks.