Incident: The company released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 0.485 billion yuan, an increase of 27.04% over the previous year; net profit to mother was 0.216 billion yuan, an increase of 17.44% over the same period last year.

Comment:

Increased orders boosted the company's performance. In the first half of 2024, the company's batch production tasks and orders for small-batch trial production of new products increased one after another, and the current production and sales volume increased steadily, leading to an increase in the company's revenue and profitability compared to the same period last year. The company's batch production of products progressed steadily, and provided stealth material maintenance services for some early equipment; the company actively followed up on customer model development tasks and participated in the development of various equipment models and special functional material products. The application of stealth material products gradually expanded from engines to airframes, ships, etc. As the number of applications of the company's product brands increased, small-batch production and delivery of compatible stealth materials, heat-resistant materials, resin-based and ceramic-based composites accelerated.

Acoustic metamaterials are progressing steadily. The acoustic metastructural materials developed by Huaqin Optoacoustics, a holding subsidiary, have gradually entered the engineering stage of actual application in the fields of rail transit, energy and electricity, aerospace, nuclear industry, building acoustics, and underwater sound stealth. The company actively continues to expand its business in the fields of acoustic laboratories, power plant noise control, energy and chemicals, wind tunnel laboratories, building sound absorption, rail transit, etc., and continues to carry out research on acoustic meta-structural materials such as aviation, underwater vehicles, high-speed trains, etc., and provides customers with laser ultrasonic nondestructive testing equipment and services.

The construction of the fund-raising project was carried out in an orderly manner. The company's fund-raising investment projects include the “Special Functional Materials Industrialization Project” and the “Special Functional Materials R&D Center Project”. In the first half of 2024, the construction of fund-raising projects is being accelerated. The company adopts the principle of construction and investment, and related plant and other infrastructure will gradually be put into use according to the actual construction situation. The Huaqin Science and Technology New Material Park (Phase II) project is also under construction planning. The company will continue to rapidly advance the construction of fund-raising projects. By the end of 2024, some plant infrastructure construction will be completed, some plants and R&D centers will be renovated, improving the efficiency of the use of capital raised, and striving to achieve early commissioning, increase production capacity, and promote performance development.

Profit forecast and investment rating: The company's revenue for 2024-2026 is estimated to be 1.224/1.619/2.107 billion yuan, respectively, and net profit to mother of 0.511/0.675/0.854 billion yuan, respectively. The company's special functional materials product category continues to expand, and profitability is expected to continue to improve, giving the company an “gain” rating.

Risk warning: the risk that downstream demand and orders fall short of expectations; the risk that new product development progress falls short of expectations; the risk that product prices will fall due to intense market competition; the risk that performance forecasts and valuation judgments fall short of expectations.