Jacques Technology released its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 3.257 billion yuan, yoy +40.21%, net profit due to mother 0.52 billion yuan, yoy +52.19%, after deducting non-return net profit of 0.526 billion yuan, yoy +50.67%. The consolidated gross profit margin for the first half of the year was 34.16%, +1.68% year on year, and the net profit margin to mother was 15.95%, +1.26% year over year. The company achieved revenue of 1.638 billion yuan, yoy +30.91%, net profit to mother 0.274 billion yuan, yoy +62.44%, after deducting non-return net profit of 0.287 billion yuan, yoy +46.73% in a single quarter. The gross profit margin for the single quarter was 37.78%, and the net profit margin was 16.70%. The continued high growth in the company's revenue performance is mainly due to downstream utilization rates and demand recovery. At the same time, the company continues to enrich product categories, expand production capacity, and gradually increase its market share.

The market share of precursors has further increased, and the three-dimensional storage has driven the growth in market size. In the first half of 2024, along with terminal demand replenishment and integrated circuit demand brought about by AI, etc., chip manufacturer capacity utilization increased, and the company's semiconductor precursor material sales increased significantly. At present, the company's precursor materials have achieved full coverage of major domestic memory chip and logic chip manufacturers, further increased its market share, and began sample testing for manufacturers of functional chips such as power devices, RF, and graphics processing. The company continues to increase investment in R&D, diversify the variety of semiconductor precursor products, and actively promote testing of new products on clients. In terms of production capacity, the company's Jiangsu Xianke localization project has been successfully built. Products such as HCDS, TMA, and TiCl4 have been verified by different clients and officially supplied. In addition, the continuous spread of high-broadband memory (HBM) applications in AI servers, as well as 3D NAND's upgrading and iteration towards more layers, are driving the trend of increasing the capacity of the precursor market.

The electronic materials business has blossomed a lot, creating a platform-based materials manufacturer. Photoresist: The company's photoresist products mainly include positive TFT film circuit positive photoresists, RGB color photoresists, OCPS photoresists, CNT antistatic materials, and photoresist supporting reagents. Customers include leading domestic display panel manufacturers such as BOE, Huaxing Optoelectronics, Guangzhou LGD, and Huike. 2024H1 Jiangsu Xianke has passed audits and on-site audits by various suppliers such as Huaxing Optoelectronics, Huike, and BOE respectively, and several photoresist products have entered the mass production and delivery stage on the client side. Fluorine-containing electronic specialty gases: Comet supplies electronic specialty gases in bulk and stably to chip manufacturers such as TSMC, Samsung Electronics, Intel, SMIC, Hynix, and BOE.

At the same time, the company is also actively developing customers. The products are tested on the client side as planned, and the process is smooth. Benefiting from the increase in the operating rate of equipment in the global semiconductor industry, the company's 2024H1 electronic specialty gas shipments also increased accordingly compared to last year. Silicon powder: Benefiting from the recovery of the downstream semiconductor chip industry, Huafei Electronics' spherical silicon powder sales increased significantly year-on-year in the first half of 2024. Huzhou Yake Huafei Electronic Materials Co., Ltd., a subsidiary of Huafei Electronics, has basically completed the construction of the first phase of the “0.039 million ton semiconductor core material project”. Currently, small-batch production of products to supply high-quality and stable raw materials to Huafei Electronics has begun to help Huafei Electronics grow in performance. LDS: 2024H1 Jacques Frey's semiconductor material delivery system (LDS) business development is progressing smoothly. The two newly developed products have already been applied to clients, and customer development is good. In the first half of the year, with domestic chip production lines being put into operation one after another and the thin film deposition process steps brought about by advanced manufacturing processes, demand for LDS increased dramatically, revenue increased dramatically, and profitability continued to increase.

LNG insulation sheets are growing steadily. As the first supplier of LNG insulation panels certified by GTT and the Classification Society in China, Yakke Technology continues to supply insulation sheets for more than 10 large LNG carriers and fuel tanks built by large shipyards such as Hudong China, Jiangnan Shipbuilding, and Dalian Heavy Industries. The world's first NO96 Super+ large LNG carrier supplied by the company with insulation sheets was successfully delivered and put into use. In addition, China's first 0.175 million cubic Mark III/Flex LNG carrier, which the company supplies insulation sheets, will also be delivered within the year. We expect the company to achieve revenue of 6.972/9.121/10.965 billion yuan and net profit to mother of 1.061/1.551/2.029 billion yuan in 2024-2026, maintaining a “highly recommended” rating.

Risk warning: Downstream demand falls short of expectations, progress in new product development and customer introduction falls short of expectations, and international trade frictions increase risks.