The recovery in demand for OLED materials combined with cost reduction and efficiency. 2024Q3's single-quarter performance reached a record high, and the company released the 2024 three-quarter report, achieving revenue of 1.093 billion yuan, +17.32% year over year; net profit to mother of 0.185 billion yuan, +88.98% year over year; deducted non-net profit of 0.174 billion yuan, +100.08% year over year. Among them, Q3 achieved revenue of 0.4 billion yuan, +26.60% YoY and +9.50% month-on-month; net profit to mother was 0.09 billion yuan, +126.27% YoY and +47.35% month-on-month. Demand for downstream consumer electronics continued to pick up to help increase sales in the display materials sector. Coupled with the company's deepening cost reduction and efficiency leading to an increase in gross margin, Q3's single quarter results reached a record high. We raised our profit forecast for 2024-2026. 0.316, 0.403 billion yuan (original value 1.99, 2.65, 3.36), corresponding EPS is 1.38, 1.81, 2.31 yuan/share, and current stock price corresponding PE is 22.7, 17.3, 13.6 times. We are optimistic that the company will expand from pre-OLED sublimation materials to the field of downstream terminal materials, promote capacity expansion and customer expansion for pharmaceutical intermediates and electronic chemicals in an orderly manner, have sufficient growth momentum, and maintain a “buy” rating.
OLED materials are developing rapidly, and profits continue to recover. In terms of multi-point layout and expected release of electronic chemicals (1) Profitability, the company's gross sales margin and net profit margin for the first three quarters of 2024 were 43.30% and 16.95% respectively. Compared with the 2024 interim report, profitability continued to improve. (2) By sector, in terms of OLED materials, the company's pre-OLED sublimation materials, especially deuterium-derived materials, have developed rapidly. In terms of product structure, it has achieved full coverage of light-emitting materials and general materials. At the same time, it has also achieved full coverage of leading international OLED terminal materials companies other than UDC on the client side, and extended to OLED terminal materials through shareholding in Optoelectronics. As BOE, Vicino and others accelerate the construction of high-generation OLED IT panel production lines, and terminal products and Tandem lamination technology are in full bloom, the gradual increase in the penetration rate of OLED panels in different terminal application scenarios is expected to drive rapid growth in demand for OLED materials, and the company is expected to fully benefit. In terms of electronic materials, the company has a multi-point layout and has developed a variety of semiconductor photoresist monomer products. Some products have already been mass-produced, and the verification work for TFT flat layer photoresists is also being actively promoted. With the increase in the number of products that have passed the verification and gradual release, it is expected to contribute to the company's overall performance in the future.
Risk warning: Investment progress falls short of expectations, changes in control, display technology iterations, etc.
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