Core views

In the first half of 2024, the company achieved operating income of 0.36 billion yuan, +36% year on year; realized net profit of 0.08 billion yuan, +57% year over year; of which Q2 revenue was 0.2 billion yuan, +20% month-on-month; realized net profit to mother 0.03 billion yuan, -24% month-on-month, of which 24H1 functional protective casing revenue was 0.3 billion yuan, accounting for 80% of revenue, gross margin of 49.37%, +5pct year on year, the company's polymer modified protective materials downstream The main industries are automobiles, construction machinery, rail transit, communication electronics, etc., and sales in the four major application areas continued to increase. In particular, sales revenue in the automobile industry (including the NEV industry) grew rapidly. The company's revenue from the automotive sector was 0.23 billion yuan, accounting for 62% of revenue, +43% over the same period last year.

occurrences

The company released its 2024 mid-year report: in the first half of 2024, the company achieved operating income of 3.0.6 billion yuan, +36%; realized net profit of 0.08 billion yuan, +57% year over year; of which Q2 revenue was 0.2 billion yuan, +20% month-on-month; realized net profit to mother 0.03 billion yuan, -24% month-on-month, of which 24H1 functional protective casing revenue was 0.3 billion yuan, accounting for 80% of revenue, gross margin of 49.37%, year-on-year + 5pct

Brief review

Sales in the four major application areas continued to increase. 24H1's performance increased year-on-year in the first half of 2024, the company achieved operating income of 0.36 billion yuan, +36% year over year; of which, Q2 revenue was 0.2 billion yuan, +20% month-on-month; and realized net profit to mother 0.03 billion yuan, -24% month-on-month, of which 24H1 functional protective casing revenue was 0.3 billion yuan, accounting for 80% of gross margin 49.37%, +5pct. The company's main downstream industries of polymer modified protective materials are automobiles, construction machinery, rail transit, communication electronics, etc., and sales revenue in the four major application fields continues to increase. In particular, sales revenue in the automotive industry (including the new energy vehicle industry) is growing rapidly. The company's revenue from the automotive sector is 0.23 billion yuan, accounting for 62% of revenue, +43% over the same period. The upgrading of the downstream industry and the requirements for localization substitution will further stimulate market demand for the company's main products.

The automobile industry is developing steadily, and policy support promotes the development of the new materials industry 24H1. China's automobile production and sales volume was 13.89 million vehicles and 14.01 million vehicles, respectively, +5%/+6% year-on-year. Among them, NEV production and sales volume was 4.93 and 4.94 million vehicles, respectively, +30%/+32% year-on-year. According to estimates by the China Association of Automobile Manufacturers, total automobile sales in China exceeded 31 million vehicles, +3% year-on-year. The automobile industry is developing steadily and continues to expand in scale. The new materials industry is listed as a national high-tech industry, a strategic emerging industry, and the top ten key areas of “Made in China 2025”. The strategic position of the industry continues to improve, and I am optimistic that the company will continue to develop in the future.

Profit forecast and valuation: The company's net profit for 2024, 2025, and 2026 is estimated to be 0.177, 0.215, and 0.251 billion yuan, respectively, and EPS is 3.2 yuan, 3.8 yuan, and 4.5 yuan respectively; the corresponding PE is 24X, 20X and 17X, respectively.

Risk warning:

(1) The risk of market competition. The company's main products are widely used. With the expansion of market size, changes in customer demand and product technology updates, if the company cannot accurately grasp the development rules of emerging industries such as new energy vehicles in the future and continue to maintain product technology and service advantages, it may face increasingly intense industry competition. Furthermore, new customer development is one of the company's performance sources. If the results of developing new customers are not ideal in the future, it will adversely affect the company's profitability.

(2) The risk that raw material prices will rise or not be supplied in a timely manner. The company's main raw materials, resin materials, multifilament, metal wire, etc. all require external procurement. Material costs are the main cost component of the company's products. Affected by price fluctuations such as upstream petroleum and copper, the price of the company's raw materials fluctuates. If the price of the main raw materials rises sharply in the future, it may adversely affect the company's operations.

(3) Revenue sensitivity analysis of the company's main business