Performance in the first half of 2024 was under pressure. Without changing the company's scarce growth, the “buy” rating company 2024H1 achieved revenue of 0.483 billion yuan (yoy -5.94%), and net profit to mother was 0.044 billion yuan (yoy +2.42%), of which the 2024Q2 company achieved revenue of 0.25 billion yuan (yoy +9.21%), and net profit to mother was 0.019 billion yuan (yoy +69.85%); the company's 2024H1 gross margin was 28.54% (+0.98pct), net interest rate 7.19% (+0.03pct); by business, OA product revenue 0.293 billion yuan (yoy -12.13%), gross profit margin 20.17% (-0.95pct), medical consumables revenue 0.144 billion yuan (yoy +18.12%), gross profit margin 43.47% (+2.72pct), mold product revenue 0.045 billion yuan (yoy -21.77%), gross margin 35.03 % (-1.74pct) Considering the pace of Zhejiang Baimingsheng Medical customer production line landing and Dinglong Weibai wafer carriers successively receiving orders, we lowered the company's profit forecast for 2024-2025 and added a profit forecast for 2026 (original value 0.25/0.352 billion yuan). The estimated net profit to mother is 0.121/0.169/0.24 billion yuan, and EPS is 0.23/0.32/0.45 yuan, respectively. The P/E corresponding to the current stock price is 68.8/49.0/34.6 times, respectively. Customers have great potential for expansion in cooperation with mainstream domestic FAB manufacturers, and maintain a “buy” rating.

The company signed a strategic cooperation framework with Fresenius, and cooperation with overseas medical giants continues to expand. On June 4, 2024, the company's holding subsidiary Zhejiang Bai Mingsheng signed a strategic cooperation framework with Fresenius. The cooperation will focus on the application of plastic consumables in the field of hemodialysis, empower both parties with the company's advantages in precision molds, automation equipment and production, and enhance the value of the supply chain and sales chain for both parties. It is also another international highlight after signing strategic agreements with in vitro diagnostic giants Roche and Refudi. It has now become a domestic company that has signed strategic cooperation agreements with the three giants at the same time. It further verifies the determination of various foreign-funded plastic consumables companies to localize procurement, supply chain security, and cost savings. The company is continuously improving its product production level and indicators to increase its stickiness with customers, increase certainty and flexibility for further deepening cooperation, increase the company's international popularity, and provide strong endorsement for development cooperation with international customers. According to the interim report, the company added 54 sets of new medical customer cooperation from August 30, 2023 to June 30, 2024, including 54 sets of molds, which are expected to achieve annual revenue of 0.105 billion yuan.

The development and production of products such as wafer carriers have been successful. Further development and sales volume of the project are worth looking forward to. The company's wafer carrier (wafer carrier is a semiconductor automation line supporting plastic consumables for wafer manufacturing, transportation, and storage, and has high requirements for accuracy, reliability, high temperature friction resistance, release, and customization) factory has the conditions for mass production. Multiple products have entered the “small batch and verification” stage of mainstream domestic fabs. Among them, all small-batch orders for FOUP products from a major domestic wafer manufacturer have been delivered. The company is expected to maintain contact with many domestic fabs and meet various needs. Precision injection mold design and manufacturing process advantages and Dinglong Co., Ltd.'s pioneering advantage in the field of semiconductor consumables. Through investment in R&D of semiconductor carriers and clean packaging, they are actively expanding other customers and various products in related fields. In the medium to long term, they are optimistic about the rapid implementation of this business and achieving autonomous, controllable and domestic replacement.

Risk warning: Production line implementation falls short of expectations, and downstream demand falls short of expectations.