Introduction to this report:

The month-on-month decline in the company's Q2 performance was in line with expectations. The company's PVP sales volume continued to grow steadily in the past 8 years, and its leading position continued to be consolidated. Maintaining the “Overweight” rating, the target price was lowered to 15.29 yuan.

Key points of investment:

Maintain an “Overweight” rating. According to customs statistics, the average export price of unlisted primary vinyl ester polymers and vinyl polymers declined month-on-month in 2024Q2. We lowered the company's 2024-2025 EPS to 0.96/1.41 yuan (the original forecast value was 1.75/2.77 yuan), and the additional EPS for 26 years was 1.42 yuan. The company's production capacity expanded rapidly, and the product matrix was continuously upgraded. Combined with comparable companies, the 2024 PE16X was reduced, and the target price was lowered to 15.29 yuan.

Q2 The results were generally in line with expectations. The sales price of the company's products has been adjusted significantly, and sales have increased significantly. At 24H1, the company achieved operating income of 0.735 billion yuan, -5.68% year over year; net profit to mother of 0.213 billion yuan, -18.79% year over year; net profit after deduction of 0.218 billion yuan, -15.36% year over year. Among them, 24Q2 revenue was 0.34 billion yuan, -18.24% YoY, -13.83%; net profit to mother was 0.092 billion yuan, -35.64% YoY, -24.59% month-on-month; net profit after deduction was 0.092 billion yuan, or -33.69% YoY and -26.56%. 24Q2 gross profit margin and net margin were 57.06% and 27.24% respectively, +3.57pct and -3.39pct, respectively, compared to 24Q1. PVP has a wide range of applications. In addition to the traditional pharmaceutical industry, it is also used in various industrial fields, food industry, daily chemicals, etc. The company ranks first in China and third in the world in the global PVP industry pattern. At the same time, the company continues to promote product structure optimization and upgrading, and is steadily increasing the share of high-end product business. We believe PVP is still expected to maintain a high level of prosperity, and the company's competitive advantage is expected to increase.

Project construction continues to advance, and growth is outstanding. Build new pharmaceutical-grade 0.01 million-ton PVP and 2000-ton PVP-I projects. 24H1, PVP-I product revenue +69.96% YoY. The revenue of Orizi series products was +9.93% year-on-year, with outstanding R&D advantages. As the company strengthens management, the medical sector is expected to reverse its plight.

Catalysts: downstream demand exceeded expectations; the decline in raw material costs exceeded expectations; overseas market development exceeded expectations;

Risk warning: European PVP companies resume production; new production capacity climbs less than expected;