Event: The company publishes its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 0.323 billion yuan, an increase of 31.5% year on year; realized net profit of 40.71 million yuan, an increase of 52.4% year on year; realized net profit after deduction of 34.59 million yuan, an increase of 50.2% year on year. With 2024Q2, the company achieved revenue of 0.188 billion yuan in a single quarter, up 24.0% year on year and 39.1% month on month; realized net profit to mother of 28.63 million yuan, up 20.9% year on year and 136.8% month on month.
Comment:
The recovery of the high-end consumer electronics market is driving demand for new functional coating materials. With the rise of the AI wave and accelerated implementation on the application side, high-end consumer electronics products are constantly being upgraded, while also spawning more new high-end consumer electronics products, which in turn is driving the demand for new functional coating materials. In the first half of 2024, the company achieved revenue of 0.271 billion yuan in the high-end consumer electronics sector, up 35.7% year on year. Among them, mobile phones and related accessories, laptop computers and accessories, and wearable devices increased by 32.9%, 6.6% and 77.3%, respectively.
Additionally, 2024H1 achieved revenue of 46.67 million yuan in the passenger car sector, an increase of 16.9% over the previous year. In terms of gross margin, the company's gross margin of 2024H1 increased 1.1 pct to 50.1% year over year through various measures such as product structure optimization and lean production management. In terms of expense ratios, 2024H1's sales, management, and R&D expense ratios decreased by 0.2, 0.8, and 1.7 pct, respectively, compared with a year-on-year increase of 1.4 pct due to an increase in short-term bank interest expenses.
Continue to deepen cooperation with end customers and launch major innovative projects. In the field of consumer electronics, through technological innovation, the company continues to explore the needs of domestic and foreign 3C strategic terminal customers represented by major consumer electronics customers in North America, major domestic H customers, Honor, Xiaomi, etc., and has also successfully introduced innovative solutions for terminal customer projects such as Samsung and Audio. In the passenger car sector, the company continues to strengthen the market in the field of interior and exterior coatings, and is making every effort to implement projects with customers of automotive OEMs and key mold manufacturers. In terms of innovative projects, after three years of technology research and development, the company can successfully obtain mass production purchase orders from industry customers after being widely used in the fields of new energy power (energy storage) batteries, photovoltaic glass, integrated circuits, passenger cars, etc., and successfully obtained mass production purchase orders from industry customers after small-batch testing and application by leading customers in the downstream power battery industry, and officially announced the successful implementation of the company's first cell-insulated UV inkjet printing model project in China.
Profit forecasting, valuation and ratings: Benefiting from the recovery in demand in the high-end consumer electronics sector, the company's coating materials revenue in the corresponding field increased significantly, which in turn led to an increase in the company's performance. Considering the recovery in demand in the consumer electronics sector and the promotion of the company's terminal client products, we raised the company's profit forecast for 2024-2025 and added a profit forecast for 2026. The company's net profit for 2024-2026 is expected to be 1.19 (6.5% increase), 1.54 (11.1% increase), and 0.201 billion yuan, respectively, maintaining the company's “increase in holdings” rating.
Risk warning: Customer introduction progress falls short of expectations, downstream demand falls short of expectations, product development risks.