Incident: The company released its 2024 three-quarter report. The first three quarters achieved revenue of 1.435 billion yuan, a year-on-year increase of 21.78%, and net profit to mother of 0.198 billion yuan, a year-on-year decrease of 13.72%. Among them, in the third quarter of 2024, the company achieved operating income of 0.5 billion yuan, a year-on-year increase of 16.78%, a month-on-month increase of 0.02%, and net profit to mother of 74.12 million yuan, an increase of 2.06% year-on-year and 5.4% month-on-month. The company plans to distribute cash dividends of 1.5 yuan (tax included) for every 10 shares to all shareholders, with a total cash balance of 51.26 million yuan. The company's single-quarter profit and net interest rate have clearly begun to rise, and single-quarter profit has improved year-on-year.

The company released its 2024 three-quarter report. The first three quarters achieved revenue of 1.435 billion yuan, a year-on-year increase of 21.78%, and net profit to mother of 0.198 billion yuan, a year-on-year decrease of 13.72%. Among them, in the third quarter of 2024, the company achieved operating income of 0.5 billion yuan, a year-on-year increase of 16.78%, a month-on-month increase of 0.02%, and net profit to mother of 74.12 million yuan, an increase of 2.06% year-on-year and 5.4% month-on-month. The company plans to distribute cash dividends of 1.5 yuan (tax included) for every 10 shares to all shareholders, with a total cash balance of 51.26 million yuan. The company's single-quarter profit and net interest rate have clearly begun to rise, and single-quarter profit has improved year-on-year.

Move forward in 2023, and continue to pursue high-quality development in 2024. In recent years, the company has continued to increase investment in R&D, built small and pilot production lines, established precision instrument laboratories, and built modern laboratories that can simulate actual applications. Through more than 30 years of accumulation, the company has cultivated a large number of professional and technical talents, and the technology has been passed down. The continuous addition of domestic and foreign technical experts and highly educated and high-level talents has helped the company overcome one technical problem after another. As the number one domestic and the world's leading manufacturer of cellulose ether, the company has gone through the whole process from imitation and imitation to independent innovation, and has now become a leader in product development in the same industry in China. The company has been deeply involved in the cellulose ether industry for many years, established a good brand image with excellent product quality and service capabilities, and has accumulated rich customer resources and sales channels.

The company's main customers include: building materials industry - Italy Mapei (Mapei), France Saint-Gobain (Saint-Gobain), German Knauf Gips KG (Knauf Gips KG), American Leitti, JCDecaux (Guangzhou) Building Materials Co., Ltd., Nippon Paint, Beijing Oriental Yuhong, Fujian Sankeshu, etc.; pharmaceutical industry - India IRIS Ingredients, Zhengda Tianqing Pharmaceutical Group Co., Ltd., Shijiazhuang Huaxin Pharmaceutical Group Co., Ltd., Lunan Pharmaceutical Group Co., Ltd. Jiangsu Deyuan Pharmaceutical Co., Ltd., etc. In 2024, the company will continue to pursue high-quality development. By adjusting the product and market structure, upgrading and expanding to high-value-added fields, pharmaceutical and food-grade cellulose ethers with a wide range of application scenarios have real potential for growth, and it is also an area that competes with international giants. The company will further increase investment in the pharmaceutical and food sector, build R&D centers, and introduce R&D equipment and high-end R&D talents, so that high value-added products can bring greater profit margins.

Net interest rates have rebounded steadily, and the company is about to enter the 2.0 phase of rapid development. The company achieved revenue of 0.5 billion yuan in the third quarter of 2024, which is already the second-best level in history. The new high-green cellulose ether plant has begun to produce building material-grade and pharmaceutical and food-grade cellulose ether products. The fixed assets of the new production capacity have all been converted. With the increase in capacity utilization, the company's net interest rate has already begun to increase month-on-month. Overseas vegetable capsule inventory removal ended in 2023, and the operating rate of new production capacity increased steadily in 2024. Overall, the company's most stressful period has passed, and various businesses have made significant improvements. In the future, the company will start lightweight and usher in a 2.0 stage of rapid development. Currently, the company has a total cellulose ether production capacity of 0.074 million tons. It is a leading domestic cellulose ether enterprise. At the same time, the company is also developing new customers in new application fields. These new products are more expensive and more profitable. In the field of vegetable capsules, the company is a global industrial chain integrated company for vegetable capsules. Currently, the company has a production capacity of 35 billion tablets. As foreign capsule inventory removal ends and normalization returns, demand for vegetable capsules is expected to pick up, and production capacity utilization rates will further increase. At the same time, the more expensive second-generation vegetable capsules have also been verified and mass sales have begun.

Maintain a “Highly Recommended” investment rating. Based on the company's performance in the first half of the year and the future international situation, we expect the company's revenue for 2024-2026 to be 1.905 billion yuan, 2.334 billion yuan and 2,775 billion yuan respectively, net profit to mother of 0.244 billion yuan, 0.314 billion yuan and 414 million yuan, respectively, and EPS of 0.71 yuan, 0.92 yuan and 1.21 yuan respectively. The current stock price corresponds to PE of 19.8 times, 15.3 times, and 11.6 times, respectively.

Risk warning: New project construction falls short of expectations, product sales fall short of expectations