Revenue is growing steadily, and investment in R&D continues to be high. The company 24H1 achieved revenue of 0.34 billion yuan, a year-on-year increase of 4.4%, and achieved net profit to mother of 0.092 billion yuan, a year-on-year decrease of -5.8%. 24H1's gross profit margin was 51.5%, down 9.0pct year on year, mainly due to the company's lower gross margin during the introduction of new materials in the second quarter and the superposition of the original materials into the middle and late stages of the life cycle. The company continues to maintain high R&D investment. The 24H1 R&D cost was 0.06 billion yuan, up 12% year on year, and the R&D cost rate was 17%. Continued high R&D investment helped the company continue to break through in the field of key materials for OLED panels and form platform-based R&D capabilities.
The materials business is growing strongly, maintaining a high growth rate of nearly 50%. The company's materials business has benefited from industry trends such as increased OLED penetration rate and accelerated localization and replacement process, and various materials have been introduced to domestic panel manufacturers to achieve stable batch supply. 24H1 achieved revenue of 0.21 billion yuan, a year-on-year increase of 49%. The materials business has maintained a high growth trend of about 50% since '21. In terms of organic light-emitting materials, the dominant products G', R', and B' materials have all been introduced into production lines to achieve stable supply; research and development of red and green main materials and mixed materials is progressing smoothly and has been sent to customers for verification. In the packaging materials and PSPI materials business, packaging materials and PSPI materials independently developed by the company have achieved production line supply. Among them, 24H1PSPI materials achieved revenue of 0.01 billion yuan and are in an incremental trend. The second half of the year is expected to be further expanded along with customer imports.
Demand for 6th generation line transformation is on the rise, and the 8.6th generation line construction relay has enabled business growth. The company was affected by the construction cycle of the 6th generation line in the first half of the year, etc., and the equipment business revenue was 0.131 billion yuan, down 29% from the previous year. The company received an order for the Mianyang BOE evaporation source transformation project and successfully delivered, and successfully won the bid for the Wuhan Tianma evaporation source renovation project. Demand for the 6th generation line renovation and upgrading continues, and the company has plenty of orders in progress. Domestic panel manufacturers are gradually advancing the layout of the 8.6 generation line, and domestic and foreign manufacturers such as BOE and Vicino have also announced plans for the 8.6 generation AMOLED production line. The company has completed the preparation of 8.6 generation linear evaporation source prototypes, which is expected to continue to empower the company's equipment business growth. In addition, the company has completed the design and processing of the perovskite evaporation machine and is undergoing assembly. In the future, it will continue to enrich the product structure and initially complete the transformation from a single evaporation source business to production line transformation and perovskite preparation.
We forecast that the company's earnings per share for 24-26 will be $0.73/1.21/1.87 (the original 24/25 forecast was 2.03/3.11 yuan, respectively, with the main reduction in revenue and gross margin forecasts and an increase in expense ratio forecasts). Based on comparable companies' 24-year 28 PE valuation level, the corresponding target price is 20.44 yuan, maintaining the purchase rating.
Risk warning
Customer concentration risk; risk of downstream panel manufacturer shipments falling short of expectations; risk of increased market competition; risk of declining gross margin; risk of inventory management; risk of perovskite technology research and development.