Incident: The company recently disclosed its 2024 semi-annual performance forecast. The net profit attributable to shareholders of listed companies is expected to be 42-58 million yuan for the semi-year 2024. Compared with the same period last year, it is expected to increase 25.138-41.138 million yuan, an increase of 149%-244% over the previous year. Net profit without return to mother is 32-44 million yuan. Compared with the same period last year, it will increase by 37.177-49.177 million yuan, an increase of 718% to 950% over the previous year.

Demand for consumer electronics has rebounded, and the company's sales volume and product structure have improved. Thanks to the recovery in demand in the downstream consumer electronics market, the company's orders have further increased, and the sales product structure has also improved, and the company's 24H1 net profit has rebounded sharply.

New energy vehicles and AI servers have become MLCC growth drivers, and demand for nickel powder is expected to continue to improve. Samsung Electric is the main customer of MLCC nickel powder from Boqian New Materials. It has benefited from industrial fields including AI servers and demand for MLCC driven by automotive electronics. Samsung Electric's MLCC revenue increased significantly 24Q1 and year over year.

Silver prices are rising, and the penetration of new products, silver-wrapped copper, is expected to accelerate. Silver prices have risen since the beginning of '24, from 6,000 yuan/kg to 7,670 yuan/kg at the end of June. Facing the situation where silver prices continue to rise, less silver and no silver are important ways to reduce the cost of heterojunction. Currently, the industrialization of silver coated copper is progressing rapidly. 30% silver-containing silver coated copper paste has been industrialized, and the industrialization and localization of slurry containing 20% silver is expected to further reduce heterojunction costs. The company 23H1 successfully completed the transformation from a pilot production line to a semi-automatic mass production line, and achieved sales of 22.4 tons of silver-wrapped copper powder throughout '23.

Considering that the recovery in consumer electronics demand fell short of expectations, we lowered the company's nickel powder sales volume and the share assumption of small-particle nickel powder, raised the assumption that cash-wrapped copper shipments would be 0.35, 0.72, and 0.91 yuan, respectively, and predicted that the company's earnings per share for 2024-2026 would be 0.35, 0.72, and 0.91 yuan, respectively (originally 0.91 and 1.34 yuan in 24-25). The valuation uses the DCF method, and a target price of 26.33 yuan was given, maintaining the purchase rating.

Risk warning

The macroeconomic growth rate is slowing down, the company's nickel powder sales fall short of expectations, the company's new-build project production capacity falls short of expectations, the risk of exchange rate fluctuations, the risk of high customer concentration, the risk of raw material price fluctuations, and the risk of inventory impairment.