Jacques Technology released its 2024 three-quarter report. In 2024Q1-Q3, the company achieved revenue of 5 billion yuan, yoy +41.1%, net profit to mother 0.75 billion yuan, yoy +55.8%, gross profit margin 32.9%, +1.0pcts year on year, net profit margin 15.1%, and +0.9pcts year on year. The company achieved revenue of 1.74 billion yuan in a single quarter, yoy +42.9%, qoq +6.4%, net profit to mother 0.23 billion yuan, yoy +64.6%, qoq -16.2%, gross profit margin of 30.5% and net profit margin of 12.8% in a single quarter. The company's continued high revenue growth was mainly due to the high boom in LNG sheets, increased customer demand in the electronic materials sector, and the release of new production capacity. The slight decline in profit margins from month to month was mainly due to changes in product structure, and there was a high demand for Q2 high-margin precursor stocks.

Demand for precursors is strong, and the market share continues to rise. Demand for AI-driven precursors increased. SK Hynix 24Q3HBM's revenue was +330% YoY and +70% month-on-month. The company said that due to strong demand for AI chips and customers' desire to expand AI investment, next year's HBM demand may be higher than current expectations, and demand will remain stronger than supply in the coming year. Storage manufacturers in mainland China continue to expand production, increasing demand for localization, and superimposing 3D NAND to upgrade and iterate more layers, all driving the trend of increasing the capacity of the precursor market. Yaktech's precursor materials have achieved full coverage of major domestic memory chip and logic chip manufacturers, further increased its market share, and began sample testing for manufacturers of functional chips such as power devices, RF, and graphics processing. In terms of production capacity, the company's Jiangsu Xianke localization project has been successfully built. Products such as HCDS, TMA and TiCl4 have been verified by various clients and officially supplied.

The electronic materials business has blossomed a lot, creating a platform-based materials manufacturer. Yake Technology's electronic segment business includes precursors, panel photoresists, electronic specialty gases, silicon powder, LDS, etc. Among them, panel photoresists have maintained rapid growth. Customers include leading domestic display panel manufacturers such as BOE, Huaxing Optoelectronics, Guangzhou LGD, and Huike, and many photoresist products have entered the mass production and delivery stage on the client side. The company continues to develop new material models and new customers. With the construction of new production capacity for 8.6 generation OLEDs in the future, the increase in the operating rate of panel manufacturers, and the continuous introduction of new material models, it will drive the company's photoresist revenue to continue to grow.

LNG insulation sheets are growing steadily, and the company is full of orders. As the first supplier of LNG insulation panels certified by GTT and the Classification Society in China, Yake Technology continues to supply insulation boards for more than 10 large LNG carriers and fuel tanks built by large shipyards such as Hudong China, Jiangnan Shipbuilding, and Dalian Heavy Industries. The company successfully delivered and put into use the world's first NO96 Super+ large LNG carrier to supply insulation sheets. The company also successfully delivered and put into use the company's first 0.0.175 million cubic Markii/ Flex LNG carrier in China to supply insulation sheets It will be delivered within the year. The technical capabilities of Chinese shipyards continue to improve. New projects are expected to drive the continuous growth in demand for LNG sheets, and the company has signed a full range of new orders.

Profit forecast and investment advice: We expect the company to achieve revenue of 6.972/9.121/10.965 billion yuan in 2024-2026, and net profit to mother of 1.01/1.45/1.91 billion yuan, maintaining a “highly recommended” rating.

Risk warning: Downstream demand falls short of expectations, progress in new product development and customer introduction falls short of expectations, and international trade frictions increase risks.