The company released its 2024 semi-annual report. In the first half of 2024, it achieved operating income of 1.109 billion yuan, an increase of 23.65% over the previous year; realized net profit due to mother of 0.191 billion yuan, an increase of 26.98% over the previous year; and realized net profit after deducting non-return to mother of 0.184 billion yuan, an increase of 48.39% over the previous year. Among them, 24Q2 achieved operating income of 0.577 billion yuan, up 24.18% year on year and 8.55% month on month; realized net profit of 0.103 billion yuan, up 44.11% year on year, up 16.93% month on month; realized net profit without return to mother of 0.103 billion yuan, up 58.48% year on year and 26.27% month on month. The company's special functional and polymer surfactant products were successfully released, and the performance increased markedly, maintaining the purchase rating.

Key points to support ratings

Product structure was optimized and adjusted, and gross sales margin gradually increased. Since production of large-scale water-reducing agent products was discontinued, small-variety products were successfully released in the first half of 2024. The production and sales volume of special functional and polymer surfactants in the first half of the year was 0.0846/0.0842 million tons respectively, +42.37%/+39.35% year on year. Among them, production and sales volume in the second quarter were 0.0437/0.0437 million tons, respectively, +55.04%/+37.89% year on year; the company's gross sales margin in the first half of 2024 was 25.23%, up 2.10 year on year pct. Among them, gross sales margin for the second quarter was 26.16%, up 4.00 pcts year on year and 1.94 pct month on month. Surfactants for special functional and polymer materials are gradually being released, and the company's profitability is expected to maintain a high level in the future.

The performance of the Shangyi factory was released, and construction of the third plant progressed smoothly. In the first half of 2024, Real Madrid Shangyi's net profit was 0.131 billion yuan, up 41.94% year on year, and Lucean's net profit was 0.066 billion yuan, up 39.17% year on year. The “third factory” Real Madrid Kaimeike started construction of a high-end functional new material project with an annual output of 0.33 million tons. In addition, Lukean's polyetheramine technical improvement project with an annual output of 0.009 million tons and an annual output of 200 tons of polyimide technology improvement projects are already in the installation and commissioning stage. As construction progresses in an orderly manner, the new production capacity is expected to be The company's development provides new momentum.

R&D continues to increase, and core competitiveness is improving. The company spent 41.9312 million yuan on R&D in the first half of 2024, an increase of 19.57% over the previous year. 12 new nationally authorized invention patents were added, 1 new internationally authorized invention patent was added, 6 new utility model patents were added, 2 additional national, industry and group standards were added to participate in the revision system, and 1 new scientific and technological achievement certification was added. The company adheres to the path of specialization, innovation, green and low-carbon development, and actively develops specialty surfactant products with independent intellectual property rights. With the variety of new products and quality optimization, its core competitiveness continues to improve.

valuations

Based on the increase in performance in the first half of the year and adjusted profit forecasts, EPS is expected to be 0.69 yuan, 0.81 yuan, and 1.03 yuan respectively, and the corresponding PE is 12.1 times, 10.2 times, and 8.1 times, respectively. We are optimistic about the company's product restructuring and growth in the volume of small products, and maintain the purchase rating.

The main risks faced by ratings

The progress of projects under construction fell short of expectations, product prices fluctuated greatly, and downstream demand continued to be sluggish.