Event: Company releases 2024 mid-year report

1) 2024H1: Achieved operating income of 1.294 billion yuan, a year-on-year increase of 28.50%; realized net profit to mother of 0.404 billion yuan, an increase of 16.79% over the previous year.

2) 2024Q2: Achieved operating income of 0.66 billion yuan, a year-on-year increase of 30.98%, and a month-on-month increase of 5.18%; realized net profit to mother of 0.235 billion yuan, an increase of 10.75% year-on-year and 38.9% month-on-month.

Revenue from the basic warehouse business increased 31% year over year, and the core sector can be expected in the future. After deducting the salt lake lithium extraction system, the company's basic business revenue was 1.196 billion yuan, an increase of 31% over the previous year, accounting for 92% of total revenue in the first half of the year. The basic warehouse business maintained a high growth rate. Among them, the revenue from the adsorption materials business reached 0.974 billion yuan, accounting for 82%, and the revenue from the system equipment business was 0.19 billion yuan, accounting for 16%. Adsorption materials are one of the main drivers of the company's performance growth. By sector, sectors such as metal resources, life sciences, water treatment and ultrapurification account for a relatively high proportion and are growing rapidly.

1) Metal resources: achieved revenue of 0.121 billion yuan, a year-on-year increase of 45%. The company's multi-dimensional layout involves the lithium industry chain, continuously improving the application level of adsorption technology in the fields of lithium ore refining, lithium battery recycling, and associated mining. The company continues to expand its business around the field of new energy metals. Among them, it has signed a number of industrial projects in the fields of nickel extraction, cobalt extraction and recycling from laterite nickel ore, and extraction of vanadium from coal; gallium oxide mother liquid has always maintained a high market share, continues to replace foreign brands in the field of uranium extraction, and product sales have accelerated.

2) Life sciences sector: achieved revenue of 0.285 billion yuan, a year-on-year increase of 33%. Benefiting from the good market performance of GLP-1 polypeptide drugs, the company's solid phase synthesis carrier business sales trend is good, domestic and foreign customer projects continue to increase, and clinical phase 2 and 3 projects are progressing steadily; at the same time, cooperative development relationships have been established with many well-known domestic pharmaceutical companies to promote the application and marketing of the company's products in the field of biopharmaceuticals; hard gel ion exchange products have completed commercial supply. In terms of research and development, a new generation of proteinA products with higher load capacity and higher alkali resistance have completed production scale-up verification and performance tests, and the overall performance of the products has been greatly improved and gradually introduced to the market. At present, the company's solid phase synthesis carriers SepLife2-CTC and sieber resin have become the main suppliers of leading varieties for peptide companies. According to company statistics and data disclosed in the 2022 annual report, the global market for GLP-1 diabetes and obesity treatment drugs is about 16 billion US dollars in 2021 and is expected to grow to about 40 billion US dollars in 2030. This will provide a broad potential market space for solid phase synthesis carriers and sieber resins, and continue to provide growth impetus for the company's life science sector.

3) Water treatment and ultra-purification: achieved revenue of 0.323 billion yuan, an increase of 30% over the previous year. Water treatment and ultrapurification are the largest businesses in the company's adsorption materials business, and are still growing rapidly. Ultrapure water is used in a wide range of fields, including nuclear power, semiconductors, and high-end drinking water. The penetration rate of the company's products in the high-end drinking water market continues to increase, and phased progress has been made in the field of ultrapure water. Currently, the company has formed long order contracts with leading customers.

According to Global Information data quoted in the company's 23rd annual report, the ultra-pure water market size is 8.2 billion US dollars in 2022, and the market size is expected to reach 15.87 billion US dollars by 2030, with a compound annual growth rate of 8.6%, and there is still plenty of room for growth in the future.

The effects of the international layout have been shown, and overseas revenue has increased dramatically. The company achieved overseas sales revenue of 0.352 billion yuan, a significant increase of 56% over the previous year. The company has been in overseas markets for many years, and internationalization is a strategy that the company has always adhered to. In recent years, the penetration rate of products in overseas markets has gradually increased, and breakthroughs have gradually been made in key overseas markets. The company's overseas market has been steadily expanding from major customers and key regions, and has expanded to cover North America, Europe, Asia, South America, Africa and other regions.

Maintain the company's “Highly Recommended” investment rating. Considering the possibility of overseas economic recession and the impact of the company's exchange rate, we slightly lowered the company's performance. We expect the company's revenue for 2024-2026 to be 3.042/3.775/4.777 billion yuan, and net profit to mother of 0.956/1.21/1.542 billion yuan, corresponding to the current PE of 21.2/16.8/13.2 times, maintaining the “Highly Recommended” rating.

Risk warning: risk of exchange rate fluctuations, weak overseas demand, economic recession, etc.