The company achieved net profit of 72.38 million yuan in the first half of the year, down 42.02% year on year. The company achieved revenue of 1.18 billion yuan in the first half of '24, down 21.06% year on year, net profit to mother 72.38 million, down 42.02% year on year, after deducting net profit of 59.82 million yuan, down 48.19% year on year. Among them, Q2 achieved revenue of 0.66 billion yuan, down 22.91% year on year, net profit to mother 30.5 Million yuan, down 60.3% year on year, net profit not attributable to mother was 25.07 million yuan, down 65.71% year on year.

The admixture business was dragged down by real estate, and profits declined year-on-year

The company 24H1 achieved revenue of 0.96 billion yuan from the new building materials (mainly admixtures) business, a year-on-year decline of 19.19%. We expect it to be mainly dragged down by declining demand on the real estate side. The gross profit margin of the 24H1 new construction materials (mainly admixtures) business was 19.81%, down 3.47pct from the previous year. We expect the price decline mainly due to the intensification of supply and demand conflicts. The company's admixture production capacity was further expanded to 1.489 million tons in the first half of the year. It already has various admixture synthesis production lines such as polycarboxylic acid synthesis, naphthalene synthesis, aliphatic synthesis, and amino synthesis. The market share in Fujian, Guizhou, Chongqing, Hainan, Shaanxi and Shanghai all ranked first. Among them, Fujian and Hainan have all had a market share of over 30% in the local market. At the same time, the company further responded to the country's “Belt and Road” development strategy and set up an adjuvant industry base in Laos. Overseas revenue was 12.75 million yuan in the first half of the year, and it is expected to continue to increase in the future.

The gross margin of the testing business bucked the trend and continued to promote the “new product, new market, new field” development company 24H1 to achieve technical service business revenue of 0.154 billion yuan, a year-on-year decline of 19.87%. The scope of services covers construction engineering, traffic engineering, electronics and new energy vehicle electronics, ecological environment and fire safety. Among them, in the field of automotive electronics, in the field of automotive electronics, Jianyan Testing has obtained third-party laboratory qualifications approved by Celis and Dongfeng Liuqi. It can test electronic component companies in the supply chain within the scope of approval service. The gross margin of the company's technical service business reached 38% in the first half of the year, an increase of 3.56 pct over the previous year, and the net profit of the subsidiary Jianyan Testing was 21.44 million yuan. The company will focus on “new products, new markets, and new fields”. Transportation engineering and electronic and electrical inspection are still the main growth points, and the NEV inspection market is expected to contribute new volume.

New energy, digital construction, etc. are expected to empower the company's growth. Maintaining a “buy” rating company is the first overall listed construction research institution in China. The additive+inspection business is two-wheel drive, and the layout in the fields of new energy and AI intelligent buildings is expected to empower the company's future growth. Considering the decline in demand, the 24-26 net profit forecast was lowered to 0.16/0.22/0.26 billion yuan (previous value 0.2/0.24/0.3 billion yuan), giving the company 14 times PE in 25 years, with a target price of 4.32 yuan to maintain the “buy” rating.

Risk warning: Production capacity investment falls short of expectations, declining demand, sharp rise in raw material prices, and business expansion such as new energy falls short of expectations.