Description of the event

Haiyou New Materials released its 2024 semi-annual report. 2024H1 achieved revenue of 1.489 billion yuan, a year-on-year decrease of 37.98%; of these, 2024Q2 achieved revenue of 0.612 billion yuan, a year-on-year decrease of 304.59%; among them, achieved revenue of 0.612 billion yuan, a year-on-year decrease of 41.71%, a year-on-year decrease of 30.26%; and net profit to mother of -0.119 billion yuan, a year-on-year decrease of 109.77%.

Incident comments

The company's Q2 film sales are expected to decline from month to month. The main reason is that under price and financial pressure, the company chose to reduce operating rates to ensure financial health. Q2 gross profit margin was -3.4%, and the period expense ratio was 10.9% (the absolute value of expenses for the period was basically the same from month to month). Affected by the May-June film price drop, the company's profitability is still under pressure. In addition, the company experienced an asset impairment loss of 0.066 billion in Q2. Mainly due to the continuous decline in particle prices, the loss of inventory prices was reduced, which further affected profits.

Faced with current market pressure, the company actively manages inventory, optimizes procurement and accounts receivable, reduces capital consumption, and fully releases liquidity risks. At the end of Q2, the company's inventory was 0.408 billion, down 36%; notes receivable and accounts were 1.72 billion, down 21%; net operating cash flow inflow was 0.15 billion, which was corrected month-on-month; the total amount of currency in hand and realizable notes was 1.07 billion, short-term loans fell to 0.77 billion, the balance ratio fell to 51%, and the bank loan amount exceeded 3 billion yuan.

In addition, the company also announced the establishment of a strategic partnership with Fuller of the United States to grant technical licenses for Fuller's designated adhesive film products. The latter can use the adhesive film formula and technology specified by the company to produce and sell adhesive film in the US, and pay the technical license fee at the rate agreed by the company. The agreement is valid for 5 years. The above cooperation is expected to help promote the company's adhesive film products in the US, accelerate the company's international industrial layout, and enhance the profitability and competitiveness of the adhesive film business.

In the new automotive materials business, the company's lightweight environmentally friendly leather products have obtained certification and orders for new models from an overseas NEV company, and have now achieved stable supply; color dimming film products have been targeted by a well-known brand for the 2025 new model project and have entered the stage of marketization and industrialization. In the future, the new automotive materials business is expected to contribute more growth to the company.

We expect the company to achieve profits of 0.17 billion yuan in 2025, which is 12 times the corresponding PE. Maintain a “buy” rating.

Risk warning

1. Deterioration of the competitive landscape;

2. PV installation falls short of expectations.