Introduction to this report:

The company's three-quarter performance report was slightly lower than expected. The adsorbent materials business maintained steady development and maintained an “gain” rating.

Key points of investment:

Maintain an “Overweight” rating. As the company's 24Q3 performance was slightly lower than expected, the 24-year EPS was reduced to 1.79 yuan (originally 1.86 yuan), and the 25-26 EPS was maintained at 2.33 yuan and 2.99 yuan, respectively.

Referring to comparable companies and considering the company's growth, 26 times PE will be given in 2025, and the target price will be raised to 60.47 yuan (originally 50.11 yuan).

24Q3 results fell slightly short of expectations. The company achieved revenue of 1.892 billion yuan in the first three quarters, an increase of 19.99% over the previous year, and achieved net profit of 0.596 billion yuan to mother, an increase of 15.10% over the previous year. Among them, the company achieved revenue of 0.597 billion yuan in the third quarter, up 4.93% year on year, down 10.00% month on month, and realized net profit of 0.192 billion yuan to mother, up 11.71% year on year and -18.13% month on month.

In terms of profitability, the company's 24Q3 gross profit margin was 51.20%, an increase over the same period last year, and remained at a high level.

Adsorption materials are developing steadily, and overseas development highlights are obvious. In the first three quarters of 2024, the company's revenue for adsorption and separation materials was 1.46 billion yuan, accounting for 77.19%; system equipment revenue was 0.366 billion yuan, accounting for 19.36%. The company's product structure has been further optimized, and the growth rate of high-margin products represented by life sciences, metals, etc. is obvious, driving the gross margin of adsorption and separation materials to increase. Among them, the growth in the life science sector is mainly due to the sharp increase in sales of downstream GLP-1 polypeptide drugs. We believe that the company is still expected to achieve rapid growth in 24-26; in terms of water treatment and ultrapurification business, the company has completed testing or online operation of electronic grade homogenized granular resins in storage and other chip manufacturers, respectively. The performance indicators fully meet the strict requirements of chip-level manufacturing, and the panel business continues to increase. On the overseas side, the company achieved overseas business revenue of 0.49 billion yuan in the first three quarters of 2024, an increase of 48% over the previous year, with impressive performance.

Salt Lake continues to lead the lithium extraction market, and the metal resources business continues to expand. The company has developed lithium extraction technology for salt lake brine adsorption and lithium carbonate refining and removal technology with independent intellectual property rights. As of mid-24, more than 15 industrial salt lake lithium extraction projects have been completed and implemented, with a total production capacity of nearly 0.1 million tons of lithium carbonate/lithium hydroxide, 6 of which have been successfully put into operation.

The company's salt lake lithium extraction project revenue in the first half of this year was 0.099 billion yuan, +8% over the same period. However, the cost advantage of the company's salt lake direct lithium extraction technology route was obvious, showing high competitiveness, and it is expected that it will continue to contribute to performance in the medium to long term.

Risk warning: project construction progress falls short of expectations, product demand falls short of expectations