The company expects a rapid increase in net profit to mother in the first half of 2024. In the first half of 2024, the company expects to achieve net profit of 0.51-0.58 billion yuan, a year-on-year increase of 50%-70%, and net profit after deducting non-return to mother of 0.52-0.59 billion yuan, an increase of 48.48%-68.03% year-on-year. Mainly due to: 1) Increased market demand for liquefied natural gas as a clean energy source, driving an increase in orders for large LNG carriers, fuel tanks, and engineering installations, and sales of LNG cryogenic insulation composite panels increased dramatically. 2) With the restorative growth of the integrated circuit industry in 2024, as well as the rapid development of artificial intelligence, big data and cloud computing, domestic integrated circuit production lines increased and production capacity increased, downstream product categories such as storage and logic chips, and high-bandwidth memory (HBM) for AI grew rapidly, and sales of semiconductor electronic materials increased markedly. 3) The display panel industry recovered in 2024, and the popularity rate of OLED display electronic products increased. At the same time, the 2024 Olympics led to a change in consumption of display electronic products, and sales of materials and ancillary products for display panels increased markedly.

The company has a high market share of precursor products, benefiting from downstream customer capacity development, while photoresist products are gradually being replaced by domestic products. The domestic downstream market increased significantly in 2024. With patents and technical reserves for related products, the company has an advantage over other manufacturers, and domestic downstream customers tend to use the company's products. In addition, the company's silicon precursor products were tested at Xi'an Samsung. According to feedback, they can meet customer product requirements, and other products are also being tested. In terms of photoresist products, the increase in the company's RGB customers mainly comes from head panel manufacturers such as BOE and Huaxing Optoelectronics. The company has achieved localized production in Yixing and has successively replaced domestic products.

Benefiting from the rapid development of the downstream shipbuilding industry and the growing demand for insulation materials from domestic liquefied natural gas storage and transportation equipment manufacturers, the company's LNG insulation board business has achieved rapid development. As the first domestic manufacturer of LNG insulation panels certified by the French company GTT and the Classification Society, the company has many core intellectual property rights through independent research and development, and has unique production technology and a highly intelligent production line. In 2023, the company and its holding subsidiary Jiangsu Yake LNG Engineering Company signed contracts with major domestic shipbuilding manufacturers such as Dalian Shipbuilding Industry Group Co., Ltd., China Merchants Heavy Industry (Jiangsu) Co., Ltd., and Yangzijiang Shipbuilding for large LNG carriers and container ships. There are sufficient orders on hand, and long-term profitability has steadily increased.

Profit forecasting and investment ratings. We expect the company's 2024-2026 net profit of 0.963 billion yuan, 1.31 billion yuan, and 1,720 billion yuan, corresponding EPS of 2.02 yuan, 2.75 yuan, and 3.61 yuan, respectively. Referring to the valuation of comparable companies in the same industry, the reasonable valuation is 35-40 times PE in 2024, and the corresponding reasonable value range is 70.70-80.80 yuan, maintaining an superior market rating.

Risk warning: Production expansion projects fall short of expectations; downstream demand falls short of expected risk.