The company released its 2024 three-quarter report: In 24Q3, the company achieved revenue of 0.889 billion yuan (YoY +1.7%), net profit of 0.125 billion yuan (YoY +7.4%), net profit of 0.119 billion yuan (YoY +7.2%). Revenue returned to a steady growth channel, with net interest rates rising steadily and profit growth slightly exceeding expectations.

We judge that the color printing performance is stable, and the film continues to grow rapidly.

Color printing: We expect stable revenue from the color printing business in 24Q3, benefiting from the Mid-Autumn Festival and National Day preparations, and expected steady sales performance, due to the year-on-year decline in crude oil prices (-7.4% YoY, -5.5% month-on-month), and product prices may fall year-on-year.

Film: We expect the film business to continue to grow rapidly in 24Q3, benefiting from the continuous commissioning of new production lines and expected to continue to contribute to growth.

As of October 23, 24Q4 crude oil prices were -16.7% year-on-year and -4.8% month-on-month. Along with a further decline in raw materials, an increase in the share of high-margin overseas & new materials business and a further increase in raw material self-sufficiency after the release of new film production capacity, the company's 24Q4 net profit margin is expected to rise steadily.

Overseas travel is being actively promoted, and the proportion of new materials is steadily increasing.

Overseas: We expect overseas business to grow faster than domestic business in 24Q3. Looking ahead, with the launch of the company's Thailand office and gradual breakthroughs in new overseas markets, overseas revenue is expected to maintain a relatively rapid growth rate.

New materials: The proportion of functional materials is gradually increasing, and materials such as single material, degradable, and high barrier have excellent innovation capabilities, driving increased profitability and deepening customer bonding.

Excellent cost control and stable operating capacity. 24Q3 gross margin was 24.1% (-1.5pct year over year). We determined that the decline in gross margin was mainly due to a year-on-year decline in product prices. The net profit margin was 14.0% (+0.7pct year over year), and the sales/management/R&D expense ratios were 1.2%/3.0%/4.3% (-0.5pct/-0.6pct/-0.4pct), respectively, and various cost ratios were steadily optimized. The 24Q3 company generated a net operating cash flow of 0.185 billion yuan (-0.014 billion yuan year over year). As of the end of 24Q3, the company had 64 days of accounts receivable turnover (+1 day year over year), 36 days of payables turnover (-5 days year over year), 47 days of inventory turnover (-4 days year over year), and stable operating capacity.

Profit forecast and investment rating: The company's net profit due to mother in 2024-2026 is expected to be 0.43 billion yuan, 0.47 billion yuan, and 0.52 billion yuan respectively, corresponding to PE of 14.2X, 12.9X, and 11.7X, maintaining “buying”

ratings.

Risk warning: Risk of fluctuations in raw material prices, declining overseas demand, and intensifying market competition.