24H1 net profit of 0.16 billion yuan to mother, maintaining a “buy” rating

Dongcai Technology released its semi-annual report for the year 24 on August 21. 24H1 achieved revenue of 2.12 billion yuan (yoy +16%), net profit of 0.16 billion yuan (yoy -27%), deducting non-net profit of 0.11 billion yuan (yoy -9%).

Among them, Q2 achieved revenue of 1.2 billion yuan (yoy +24%, qoq +31%) and net profit of 0.11 billion yuan (yoy -27%, qoq +115%). We expect the company's net profit to be 0.41/0.54/0.65 billion in 2024-2026, and EPS of 0.46/0.60/0.73, respectively. Comparatively, the company Wind agreed to expect the average PE value to be 19 times, giving the company a 24-year 19xPE valuation, with a target price of 8.74 yuan, maintaining a “buy” rating.

The company released electronic materials smoothly, actively optimizing the structure of optical film products. In terms of electronic materials, the company actively promoted the verification of new products such as high-frequency high-speed resins, and production capacity was released one after another. 24H1 sales volume yoy +43% to 0.029 million tons, basic epoxy resin prices were under pressure. The average sector price yoy -7% to 0.019 million yuan/ton, sector revenue yoy +34% to 0.54 billion yuan, and the sector gross margin was 12.0%; in terms of optical film materials, the company actively optimized product structure and polarized light Products such as sheet release film base film, MLCC release film, and automotive functional film continued to increase. The sales volume of the segment increased yoy +5% to 0.044 million tons, the average sector price yoy +4% to 0.012 million yuan/ton, revenue yoy +9% to 0.51 billion yuan, and the sector's gross margin was 14.6%.

The profit of materials at the new energy power generation end is under pressure. The company's 24H1 comprehensive gross margin yoy-5.5 pct to 14.6% in terms of new energy materials, sales volume yoy +33% to 0.039 million tons, average price yoy -18% to 0.019 million yuan/ton, revenue yoy +9% to 0.72 billion yuan, gross margin of 18.3%, mainly due to increased competition in the photovoltaic industry chain and increased market share of double glass modules; in terms of insulation materials, sales yoy +27% To 0.022 million tons, average price yoy -16% to 0.01 million/ton, revenue yoy +7% to 0.22 billion yuan, gross margin was 11.8%. 24H1 comprehensive gross margin yoy-5.5pct to 14.6%, and the period expense ratio yoy-3.1pct to 9.0%, mainly due to the termination of the equity incentive plan without accounting for equity incentive fees.

Adding electronic resin for high-speed communication substrates is expected to increase the company's performance in the future. According to the company's announcement, the company plans to invest 0.7 billion yuan to build an annual output of 20,000 tons of electronic materials for high-speed communication substrates (including 5,000 tons of electronic grade low dielectric loss thermosetting polyphenyl ether resin, 2000 tons of electronic grade non-crystalline maleimide resin, 1500 tons of electronic grade crystalline maleimide resin, 4000 tons of electronic grade low dielectric loss active ester curing agent resin, 3,500 tons of electronic grade hydrocarbon resin, 4000 tons of electronic grade low dielectric loss (Phosphorus-containing flame retardant resin), which is expected to increase the company's overall profitability in the future.

Risk warning: Downstream demand growth falls short of expectations; progress of new projects falls short of expectations; domestic substitution progress falls short of expectations.