occurrences

On August 30, the company disclosed its 2024 semi-annual report.

In the first half of 2024, the company's profitability remained stable, achieving revenue of 0.216 billion yuan, an increase of 11.48% over the previous year. At the same time, in order to keep up with industry trends and optimize the customer structure, the company's business scope continued to expand. Subsidiaries newly included in the scope of consolidated statements during the reporting period increased expenses during the start-up phase, and net profit attributable to shareholders of listed companies was 22.9063 million yuan, a year-on-year decrease of 4.04%.

Key points of investment

Through the acquisition and layout of new businesses, AG glass, cooling fans, and liquid silicone explore new markets. Relying on high brand awareness, strong technology accumulation and high-quality customer resources, the company closely follows industry trends and actively lays out new businesses through new establishment, mergers and acquisitions, etc. Through the establishment of Guangdong Siquan Electronic Glass Co., Ltd., we promoted the application of AG glass in the fields of educational tablets, conference tablets, industrial control touch products and high-end display products; promoted the application of cooling fans in automobiles, laptops, servers, etc. through the acquisition of Dongguan Fanshuo Electronic Technology Co., Ltd.; and promoted the application of liquid silicone in mobile phones, tablets and other fields through the acquisition of Guangdong Keming Precision Mold Co., Ltd.

Major customers actively lay out and develop multiple application fields. The company has been deeply involved in the cooling industry for many years and has accumulated many high-quality and stable customer resources. The terminal brands it serves include major North American customers, Xiaomi, Vivo, Samsung, Google, ABB, Flextronics, BYD, Foxconn, Huaxing Optoelectronics, Shenzhen Tianma, Wentai Communications, Huaqin Communications, and Longqi Electronics. The company will make full use of excellent process management experience, years of cooling solution design experience, perfect quality management system, efficient procurement management system, good supporting production capacity, strong cost control level and process improvement advantages to step up efforts to develop customers in other industries such as laptops, communications, new energy vehicles, photovoltaic energy storage, servers, etc. on the basis of continuing to stabilize customers in the consumer electronics industry to promote the company's sustainable and healthy development, further enhance its market share, and consolidate and enhance its position in the industry. During the reporting period, the company's business developed steadily in the consumer electronics sector. Among them, demand for orders from major North American customers rose rapidly, and the company continued to increase its market share; achieved significant revenue growth in the automotive sector; achieved breakthroughs in smart homes, drones, etc., and successfully established cooperative relationships with well-known customers in related industries.

Actively expand production capacity and expand product lines and application areas. In order to respond to market trends and enhance the company's market competitiveness, the company plans to use its own capital or self-financing to invest no more than 0.42 billion yuan in the construction of the Siquan New Materials (Dongguan) precision manufacturing project to build a stainless steel VC project with an annual output of 60 million pieces; a cooling module project with an annual output of 6 million pieces; a titanium alloy structural component project with an annual output of 14.4 million pieces; a cooling fan project with an annual output of 4.7 million units; and a liquid silicone project with an annual output of 0.1 billion pieces. Facing markets such as consumer electronics, new energy vehicles, energy storage and photovoltaic inverters, we plan to build modern production workshops and supporting facilities, introduce advanced manufacturing equipment and corresponding personnel, and enhance the production capacity, R&D capacity and market competitiveness of the company's existing thermal management products such as liquid silicone, cooling modules, cooling fans, titanium alloy structural parts, etc., which is an important step for the company to implement its development strategy and help enhance the company's overall competitive strength. At present, the new factory area of the company's fund-raising project has begun to be put into operation one after another. The company is further optimizing and adjusting the production line according to the production situation to ensure efficient and stable operation after full commissioning, and to speed up the progress of production capacity climbing.

The strategy focuses on the field of thermal management to enhance the company's brand competitiveness. The company will continue to promote the product strategy and global market strategy of “materials+components+cooling systems” for thermal management, improve and enrich the company's thermal management product system, continuously develop and accumulate application technology for thermal management products in the fields of consumer electronics, communication equipment, new energy vehicles, photovoltaics, energy storage, energy storage, energy storage, energy storage, photovoltaic inverters, security monitoring, intelligent Internet of Things; strive to make the nano protective materials business the company's second business growth curve for the company Continued improvement in profit levels and a firm foundation for healthy and steady development.

Investment advice

We expect the company to achieve revenue of 0.57/0.77/1.08 billion yuan in 2024/2025/2026, and realized net profit of 0.08/0.11/0.17 billion yuan respectively. The current stock price corresponding to 2024-2026 PE is 45 times, 32 times, and 21 times, respectively, covered for the first time, giving it a “buy” rating.

Risk warning

Industry and market competition risk; overseas business operation risk; risk of innovation or new products falling short of expectations; risk of fluctuating raw material prices.