Core views:
The company's 2024H1 performance increased, the profitability of the main home textile industry increased dramatically, and the new materials business developed rapidly. The company released its 2024 semi-annual report. For the first half of 2024 (H1), the company's revenue was 2.668 billion yuan (YOY +2.0%), net profit to mother was 0.222 billion yuan (YOY +75.2%), gross profit margin 18.2% (+3.1 pct year on year); looking at the second quarter, 2024Q2 revenue was 1.352 billion yuan (YOY +5.2%), net profit to mother 0.131 billion yuan (YOY +29.06%), gross profit margin 19.04% (same as same Ratio +0.2pct); The company plans to distribute 1.5 yuan (tax included) for every 10 shares. The increase in profitability of 2024H1 is mainly due to the increase in the share of high value-added products in the home textile industry and the reduction in production costs due to falling cotton prices at home and abroad (2024H1, gross profit margin of home textiles 23.4%, +5.4 pct year on year). By business, 2024H1, the home textile business revenue is 1.909 billion yuan (YOY +0.1%); the special coating business revenue is 0.082 billion yuan (YOY +54.2%); the chemical business revenue is 0.104 billion yuan (YOY +2.5%); and other industries have revenue of 0.573 billion yuan (YOY +3.3%).
I am optimistic that the company's 2024H2 performance will maintain a relatively rapid growth rate. According to the company's financial report, 23Q1/Q2/Q3/Q4's net profit to mother was 0.25/0.102/0.119/0.041 billion yuan, respectively. Although the year-on-year growth rate of 2024H2 performance may be affected by a rise in the base, it is expected to maintain rapid growth: (1) In the home textile business, 2024H1 continues to optimize its product structure, increase domestic sales development efforts, and strengthen refined channel management. (2) In the special coating business, there are sufficient orders for 2024H1. The first phase of the coating production capacity of 0.05 million tons is in the process of climbing capacity, and it is expected that all production will be achieved by 2025. (3) In the lithium battery electrolyte additive business, 2024H1 completed the full process of the triethylamine workshop, greatly increased the monthly output to 500 tons, and successfully achieved balance between key cost projects in June.
Profit forecasting and investment advice. We expect the company's earnings per share for 2024-2026 to be 0.54/0.63/0.70 yuan, respectively. Referring to comparable company valuations, the company will be given 12 times PE in 2024, with a reasonable value of 6.53 yuan/share, maintaining a “buy” rating.
Risk warning. Risks such as channel management, industry competition, and freezing of shares held by actual controllers.