Baicheng Co., Ltd. released its 2024 interim report. According to the interim report, 2024H1 achieved revenue of 2.502 billion yuan, +73.69% year over year; net profit to mother 0.1 billion yuan, +7.21% year over year; deducted non-net profit of 0.096 billion yuan, +4.05% year over year. On a quarterly basis, 24Q1/24Q2 revenue was 1.145/1.358 billion yuan, +111.11%/51.10% YoY; net profit to mother was 0.056/0.044 billion yuan, respectively, +37.77%/-16.35%. The company's revenue remained high in the first half of the year, but the growth rate of performance slowed down. The main reason was the decline in gross margin and increased impairment. 2024H1 accrued asset impairment of 0.033 billion yuan (including goodwill impairment of 0.007 billion yuan), 23H1 asset impairment of 0.019 billion yuan, 24H1 recovery credit impairment of 0.004 billion yuan, and 23H1 recovery credit impairment of 0.008 billion yuan.
Q2 Net operating cash flow inflows increased, and overall gross margin declined. According to the company's interim report, the company's 24H1 operating cash flow had a net outflow of 0.353 billion yuan, and 23H1 had a net operating cash flow outflow of 0.17 billion yuan. Among them, 24Q2 operating cash flow was 0.18 billion yuan, an increase of 0.09 billion yuan over the same period last year.
In terms of profitability, the company's 24H1 gross margin/net margin was 9.50%/3.98% respectively, down 3.84/2.46pct year-on-year respectively. The profit level declined, which is expected to be mainly affected by raw materials.
BOE has signed a new 8.6th generation AMOLED production line project, and panel orders can be expected to continue to land.
By business, the clean room system integration business had revenue of 1.13 billion yuan, +19% year-on-year, with a gross profit margin of 8.3%. The revenue of the electromechanical process system business was 0.83 billion yuan, +141% year-on-year, and the gross profit margin was 10.2%.
The revenue from the secondary distribution business was 0.54 billion yuan, +298% year-on-year, and the gross profit margin was 11.1%. The company achieved high growth in all businesses in the first half of the year, and on August 21, the company announced that it won the bid for BOE's 8.6th generation AMOLED production line project clean project (P2 section) with a bid amount of 0.713 billion yuan (tax included). We judge that the company's future panel orders are expected to continue to be implemented (BOE announced in November 23 that it plans to build an 8.6th generation AMOLED production line in 24, with a total investment of 63 billion yuan).
Profit forecasting and investment advice. The company's net profit for 24-26 is estimated to be 0.277/0.355/0.431 billion yuan, respectively. The judgment of a reasonable value of 13.26 yuan/share remains unchanged, corresponding to the 24-year valuation of about 25 times PE, maintaining a “buy” rating.
Risk warning: New orders fall short of expectations; order execution falls short of expectations; gross margin continues to decline.