The company released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 0.414 billion yuan, an increase of 12.0% over the previous year, and realized net profit of 0.128 billion yuan to mother, an increase of 17.4% over the previous year. Maintain a “buy” rating.

Major industries such as nucleating agents and hydrotalcite continued to grow, supporting the steady improvement of the company's performance. In the first half of 2024, the company achieved revenue of 0.414 billion yuan, up 12.0% year on year; realized net profit to mother of 0.128 billion yuan, up 17.4% year on year. Among them, in the second quarter, the company achieved operating income of 0.223 billion yuan, up 11.7% year on year; realized net profit to mother of 65.98 million yuan, up 14.7% year on year. In the first half of the year, the company's nucleating agents achieved revenue of 0.253 billion yuan, an increase of 27.67% over the previous year; the synthetic hydrotalcite business achieved revenue of 0.0058 million yuan, an increase of 20.54% over the previous year. In the first half of the year, the company focused on promoting product iterative upgrading and continuous improvement of product competitiveness. The overall gross sales margin reached 45.09%, an increase of 1.56 pcts compared to 2023. In the first half of the year, the company effectively promoted the “improve quality, increase efficiency and return” action plan, implemented and completed the 2023 annual equity distribution, and distributed a cash dividend of 99.3623 million yuan (tax included). In March 2024, the company completed share repurchase, with a cumulative total of 2,844,565 shares repurchased to maintain the long-term stability of the company's stock price.

R&D investment has borne fruit again, and construction of new projects is progressing smoothly. The company maintains a high investment in R&D to support continuous innovation capabilities, patented technology and formulation advantages. In 2023, the company added 7 invention patent authorizations, 4 in China, 2 in India, and 1 in Korea, and applied for 9 new invention patents.

Among them, it has obtained 1 Chinese invention patent license for flame retardant modification of synthetic hydrotalcite and special modification of agricultural film. The company is expected to achieve breakthroughs in new fields such as flame retardant cables and agricultural film in the future. The company's toughening nucleating agent products have obtained food contact certification from the US Food and Drug Administration (FDA). This is the fourth FDA certification that the company has independently applied for and approved. The polymer material additive production technology transformation project has contributed to the increase in production capacity, alleviating the tight production capacity situation of the company in the early stages. The first phase of the fund-raising project Guangzhou Kecheng's new polymer material additives construction project is progressing steadily to support the company's long-term growth in the future.

Investment advice: The company's production and sales volume is expected to be gradually released as the domestic substitution process progresses and customer development. EPS is expected to be 1.97 yuan, 2.32 yuan, and 2.72 yuan respectively in 2024-2026. Maintain a “buy” rating.

Risk warning: Downstream market sentiment falls short of expected risk; market development of new products falls short of expected risk; progress of projects under construction falls short of expectations and risk of change.