Revenue increased slightly in the first half of 24, and performance was in line with expectations. 24. Revenue for the first half of the year was 3.582 billion yuan, up 4.35% year on year; net profit to mother was 0.416 billion yuan, down 19.54% year on year, after deducting non-net profit of 0.431 billion yuan, down 10.02% year on year. Among them, 24Q2 revenue was 2.067 billion yuan, up 15.75% year on year, up 36.41% month on month; achieved net profit of 0.251 billion yuan, up 52.12% month on month, Q2 minus 0.247 non-net profit billion yuan, up 34.23% month-on-month; performance is in line with expectations.

Electrolyte profits have bottomed out, and there is limited room for price reduction. The company's battery chemicals achieved revenue of 2.293 billion yuan in the first half of the year, up 4.44% year on year; battery chemical production in the first half of the year was 0.157 million tons; we expect to ship nearly 0.08 million tons of electrolytes and produce nearly 0.08 million tons of solvents; the gross profit margin of battery chemicals was 13.65%, down 2.08% year on year, mainly due to declining lithium carbonate prices and intensifying competition in the industry. We expect 24H1's electrolyte business to break even. We expect shipments of 0.18-0.2 million tons for the whole year, an increase of 20-30%. The profit per unit of electrolyte basically bottomed out, and the net profit per ton remained at the level of 100 yuan during the year.

Due to increased demand for organic fluoride products and the global domestic replacement window for fluoride products, the company's fluoride products have ushered in more room for growth. 24H1 Organofluorochemicals achieved revenue of 0.712 billion yuan, a year-on-year decrease of 4.72%, and gross margin fell 10.17%, mainly due to lower gross profit after Heidford put into production and consolidated caliber calculation. The production of organic fluorine chemicals was 0.0071 million tons in the first half of the year, and industry demand remained stable. In the future, along with the development of artificial intelligence, big data and other industries, the company's organic fluorine chemicals are expected to usher in rapid development. The capacitor chemicals business achieved revenue of 0.365 billion yuan, a year-on-year increase of 20.07%, a gross profit margin of 40% +, and remained stable. Capacitor chemicals and semiconductor chemicals are expected to contribute nearly 0.1 billion yuan to net profit in the first half of the year.

Profit forecast and investment rating: The company's earnings in electrolytes and fluorine chemicals are expected to recover in 2025, and the company's capacitor chemicals are growing significantly. We expect the company's net profit to be 1.072/1.507/2.011 billion yuan in 2024-2026, an increase of 6.06%/40.58%/33.42%. The corresponding PE is 21.21x/15.09x/11.31x, maintaining the “buy” level.

Risk warning: Risk of sales falling short of expectations, risk of industry competition increasing risk, and risk of performance forecasting and valuation judgments falling short of expectations.