occurrences

On August 21, the company released its 24-year semi-annual report. 1H24 achieved revenue of 0.438 billion yuan, +54.88% year over year; realized net profit of 0.055 billion yuan, +223.67% year over year; realized net profit deducted from mother 0.044 billion yuan, or +943.44% year over year. 2Q24 achieved revenue of 0.238 billion yuan, +19.28% month-on-month; realized net profit of 0.039 billion yuan to mother, +150.33% month-on-month.

reviews

Q2 Sales rebounded month-on-month, the share of high-end products recovered, and the company's performance increased significantly month-on-month. As demand in the downstream consumer electronics market continues to recover, the company's sales volume of nickel powder and copper powder for MLCC increased significantly compared to the same period last year. Combined with the increase in demand from downstream customers for small-particle nickel powder for high-grade MLCCs, the company's sales product structure also improved. As the company's core customer, Samsung Electric, achieved MLCC revenue of 105.59 billion won, +16% month-on-month, and continued improvement since the fourth quarter of '23, mainly due to revenue growth in all downstream consumer electronics sectors, and it is expected that 3Q24 will experience seasonal increases in demand, including new smartphones and the industrial and automotive sectors.

Nickel prices stabilized, stocks of high-priced raw materials were gradually cleared, and product gross profit gradually recovered. Since the beginning of the year, overall nickel prices have remained stable, and as the company's sales volume increased month by month, the previous inventory of high-priced raw materials was gradually consumed, and the gross margin of the product increased quarterly. 2Q24's consolidated gross margin was 24.49%, up 5.7 percentage points from month to month, and has continued to rise since the fourth quarter of last year.

A powder materials platform company is gradually sending samples of new products in the field of passive components. Driven by the wave of digital intelligence, the passive electronic components industry is showing a trend towards miniaturization, high frequency, and high power. The sub-micron and micron multi-alloy powders developed by the company are the basic materials for the iterative upgrading of traditional passive electronic components, and sample evaluation work has been carried out for many customers.

The sharp rise in silver prices is expected to promote the industrial application of bank-wrapped copper. Since this year, the price of silver has risen significantly, and the price of photovoltaic silver paste or silver powder as an auxiliary material for photovoltaics has risen sharply. Against the backdrop of cost reduction and de-silvering in the photovoltaic industry, the rise in silver prices has further accelerated the pace of industrialization of silver coated copper in the industry. Guided by market demand, the company has successively launched a variety of new HJT silver-coated copper powder products with good conductivity and low silver content, and continuously expanded the silver-coated metal powder series product line.

Profit Forecasts, Valuations, and Ratings

The company's 24-26 revenue is estimated to be 1.097 billion yuan, 1.554 billion yuan, and 2.168 billion yuan, respectively, and net profit due to mother is 0.135 billion yuan, 0.19 billion yuan, and 0.289 billion yuan respectively. The corresponding EPS is 0.52 yuan, 0.73 yuan, and 1.10 yuan respectively, and the corresponding PE is 39.72 times, 28.34 times, and 18.61 times, respectively, maintaining the company's “buy” rating.

Risk warning

Raw material price fluctuation risk; downstream demand fluctuation risk; exchange rate fluctuation risk.