occurrences

On October 25, the company released its quarterly report for the year 24. In the first three quarters, it achieved revenue of 0.727 billion yuan, +47.96% year over year; achieved net profit of 0.085 billion yuan, +562.41% year over year; and realized net profit of 0.069 billion yuan without deduction to mother, turning a year-on-year loss into a profit. 3Q24 achieved revenue of 0.289 billion yuan, +21.05% month-on-month; realized net profit to mother of 0.031 billion yuan, or -21.79% month-on-month.

reviews

The MLCC industry continues to recover, and the increase in product shipments has driven a significant increase in the company's performance. As the downstream consumer electronics sector picks up and demand for AI servers rises, the MLCC market continued to recover in Q3, and demand for nickel powder and copper powder for MLCC was boosted. The company has been cooperating with leading electronic components companies for a long time, and new small-particle nickel powder-related products for high-end electronic pastes have been successfully introduced into the supply chain systems of major overseas customers and formed batch sales. The average price of 3Q24 Changjiang non-ferrous copper was 0.0751 million/ton, -5.7% month-on-month; the average price of non-ferrous nickel in the Yangtze River was 0.1301 million/ton, -9.0% month-on-month. Prices of copper and nickel raw materials declined, while 3Q24's revenue increased significantly month-on-month. Based on this, we estimate that the company's product shipments increased significantly month-on-month and capacity utilization was restored to a historically high level, which was the main driver of Q3's performance.

Product structure optimization and exchange losses affect the company's short-term gross profit performance. Downstream customers are increasingly demanding small-particle nickel powder for high-grade MLCCs, and the company's product structure optimization and structural adjustment phase affects the company's gross profit performance. The company's product export business is mainly settled in US dollars. The overall appreciation of the 3Q24 RMB exchange rate against the US dollar partially affected the company's revenue performance. At the same time, RMB appreciated sharply against the US dollar at the end of the performance period. The resulting exchange gains and losses also affected the company's short-term profits. Under the influence of product restructuring and short-term exchange rates, the 3Q24 company's gross margin was 19.75%, -4.74pct.

The company's many new product businesses have been promoted one after another, opening up room for incremental performance. The company has successively launched a variety of new HJT silver-coated copper powder products with good conductivity and low silver content, continuously expanding the product line of silver-coated metal powders; while expanding the application of sub-micron and micron soft magnetic materials, the developed sub-micron and micron multi-alloy powders have carried out sample evaluation work for many customers; in addition, the company collaborates with customers to develop new products for silicon-based materials to cooperate with downstream customers to optimize key indicators for power batteries. The continued promotion of the company's many new businesses is expected to further open up room for incremental performance.

Profit Forecasts, Valuations, and Ratings

The company's 24-26 revenue is estimated to be 1.097 billion yuan, 1.554 billion yuan, and 1.9 billion yuan, respectively, and net profit due to mother is 0.135 billion yuan, 0.19 billion yuan, and 0.239 billion yuan respectively. The corresponding EPS is 0.52 yuan, 0.73 yuan, and 0.91 yuan, respectively. The corresponding PE is 52.27 times, 37.30 times, and 29.57 times, respectively, maintaining the company's “buy” rating.

Risk warning

Raw material price fluctuation risk; downstream demand fluctuation risk; exchange rate fluctuation risk.