Incident: The company announced the 2024 three-quarter report. During the reporting period, revenue, net profit attributable to mother, and net profit without return to mother were 1.892, 0.596, and 0.578 billion, respectively, +19.99%, +15.1%, and +15.43%, respectively. Among them, Q3 achieved revenue, net profit to mother, and net profit without return to mother were 0.597, 0.192, and 0.185 billion, respectively, +4.93%, +11.71%, and +13.41%, respectively. , -18.45%.

Q3 revenue grew steadily year over year, but declined month-on-month due to the pace of project confirmation. Currently, the company has shown strong growth in downstream directions such as water treatment and ultra-purification, life science, and metal resources, and has continued to grow rapidly in many application directions, including the above. Although the domestic economy is under pressure in Q3, the company's downstream resin customers are generally distributed in the high-end sector, and customer purchasing power is less affected by the economic environment. We expect that growth poles, including high-end drinking water and solid phase synthesis carriers, will still show a rapid growth trend. Q3 The company's revenue scale declined month-on-month. Combined with the characteristics of the system equipment business confirming revenue at the pace of project progress, we expect to be disrupted by this and not change the overall trend of upward growth.

Product structure optimization continues to advance, and the gross margin for a single quarter was the second highest in history. As high-quality growth trends such as life science continued to grow rapidly, the company's product structure continued to be optimized, and the increase in the share of high-margin products led to an increase in the overall gross margin level. 24Q3, the company's gross margin was 51.2%, the second-highest in history.

Q3 Expense control was good, and the cost rate declined year-on-year during the period. 24Q3's sales/management/R&D/finance expense ratios were -0.48/-0.19/+0.09/-0.64pct, respectively. While the revenue scale increased steadily year-on-year, expenses were controlled well during the period, increasing profit levels.

The construction of additional production capacity continues to advance, and the number of projects under construction has increased dramatically. At the end of the third quarter of '24, the scale of the company's projects under construction increased by 53.81% compared to the beginning of the year. We expect the company to increase the pace of production capacity construction in the face of multi-dimensional resonance growth. On July 30, '24, the company announced that its wholly-owned subsidiary Pucheng Lanxiao plans to purchase 0.02 million tons of high-end material production capacity. The new capacity plan is mainly used for high-value-added varieties such as ultrapure water and food. With the addition of high-end production capacity, the company's size and structural advantages will be further strengthened.

Profit forecast and investment advice: Lowering the profit forecast, the company is expected to achieve operating income of 2.892/3.631/4.53 billion yuan in 24-26, up 16.18%/25.58%/24.74% year on year, and achieve net profit of 0.854/1.112/1.389 billion yuan, up 19.08%/30.2%/24.92% year on year. The current stock price corresponding to 24-26 PE is 33.54/25.76/20.62X, respectively, considering the company's A leading platform-based adsorption material company, all business segments are growing in resonance and maintaining a “highly recommended” rating.

Risk warning: market competition risk; loss of core technical personnel, technology leaks, etc.