Incident: The company released its 2024 semi-annual report. During the reporting period, the company achieved revenue of 1.109 billion yuan, a year-on-year increase of 23.65%, a year-on-year increase of 0.191 billion yuan, a year-on-year increase of 26.98%, after deducting non-return net profit of 0.184 billion yuan, a year-on-year increase of 48.39%; of these, the second quarter achieved revenue of 0.577 billion yuan, an increase of 24.18% year on year, and net profit of 0.103 billion yuan. 17.04%, net profit without return to mother of 0.103 billion yuan, up 58.48% year on year and 27.16% month on month.

Focus on the small variety sector, and profits have increased steadily. The surfactant industry has the characteristics of many varieties and low industry concentration. Among them, low-end products are fiercely competitive, and many high-end products still rely on imports. The company stopped producing and selling large products with relatively poor profitability in mid-2023, focusing on the small variety sector.

2024H1 achieved specialty surfactant production of 0.0846 million tons and sales of 0.0842 million tons, up 39.35% year on year, with an average unit price of 13,168 yuan/ton. Among them, the strategic emerging sector achieved sales of 0.0221 million tons, revenue 0.285 billion yuan, and an average unit price of 0.0129 million/ton; of these, it achieved sales of 0.0437 million tons of specialty surfactants in a single quarter, an increase of 38% year on year It increased 8% month-on-month, and the strategic emerging sector achieved sales volume of 0.0115 million tons, an increase of 9% month-on-month. 2024Q2's comprehensive gross profit margin was 26.16%, up 1.94 pcts month-on-month, net profit margin 17.81%, and 1.28 pcts month-on-month.

The company has a wide range of products and continues to develop and cultivate new segments. The company has a wide range of products. At present, it has developed nearly 1,800 kinds of products. In the first half of 2024, 12 new nationally authorized invention patents were added, 1 new internationally authorized invention patent was added, and 6 new utility model patents were added. Two new national, industry, and group standards were added to the participatory system, for a total of 82. The company continues to cultivate new sectors. At present, it has formed 16 major sectors, and is continuously developing new products. Application sectors such as new functional materials, resins and high-end electronic chemicals are being cultivated at an accelerated stage. Its broad market prospects will guarantee the company's continued development.

The project under construction is progressing smoothly, and the construction of the Kaimeike Factory is being promoted to open up room for long-term growth. As of June 30, 2024, the company's technical improvement project with an annual output of 0.009 million tons of polyether amine is being installed and commissioned; the technical improvement project with an annual output of 200 tons of polyimide is being commissioned, and the products are mainly used in the aerospace field; Real Madrid's 0.33 million ton high-end functional new materials project (Phase I) has finished the main buildings in administrative districts and public areas. Interior and exterior decoration projects are in the construction phase. It is expected that with the successive commissioning of projects under construction, the company's profit is expected to reach another level.

First coverage, giving a “Highly Recommended” investment rating. The company's revenue for 2024-2026 is estimated to be 2.39, 2.98, and 3.58 billion yuan, respectively, and net profit due to mother is 0.388, 0.479, and 0.568 billion yuan, respectively. The PE corresponding to the current stock price is 13.2, 10.7, and 9.0 times, respectively, covered for the first time, and given a “highly recommended” rating.

Risk warning: the risk of increased market competition, safe production, and fluctuating raw material prices.