Incident: The company released its 2024 three-quarter report. The company achieved revenue of 4.265 billion yuan in the first three quarters of 2024, up 10.57% year on year, and net profit of 0.314 billion yuan, up 10.95% year on year. Of these, revenue was 1.445 billion yuan in the third quarter, up 6.93% year on year, and net profit to mother was 0.094 billion yuan, down 6.47% year on year? Lianlong has been deeply involved in the industry for more than 20 years and has developed into the only company in China and one of the two companies in the world with the most complete product categories in the polymer materials anti-aging industry. The products cover primary antioxidants (PrimaryAntioxdants), Secondary Antioxidants (Secondary Antioxdants), UV absorbers (UVA), blocked amine light stabilizers (HALS), and compound customization (U-pack). It is the main manufacturer and supplier of a full range of anti-aging additives for polymer materials around the world. Over the years, the company has continued to focus on the development trend of the global polymer materials industry from the perspective of product support and technological innovation, keeping an eye on customer needs, developing application technology and improving customer service. The six major production bases set up in Tianjin, Ningxia, Changshan, Hengshui, Inner Mongolia and Zhuhai have protected the stable supply of global customers. It has become the only company in the world with backup factories for almost all products, and has a solid supply guarantee.

The company adheres to the long-term sustainable development concept of having food in the core business pot, food in the strategic business warehouse, and rice in the field for emerging businesses. Adhering to the concept of long-term sustainable development, the company built Centennial Lianlong, and planned and laid out three major business segments, forming the core business, the first life curve polymer materials anti-aging business, the strategic business, the second life curve lubricant additive business with food in the warehouse, and the emerging business, the third life curve life science business with rice in the fields. The company's first, second, and third life curves are clear. The first curve has been deeply involved in the field of anti-aging materials for many years. The basic infrastructure is solid and stable, the technical and talent reserves are sufficient, and future development expectations are determined. The second curve lubricant additive is in a critical window period of autonomy and control in the supply chain. The second phase of the new production capacity was put into operation in 2023, and the operating rate continued to rise in 2024. There is high certainty that future incremental development in this field will accelerate. The third curve is a vast field of life science. Based on the future, the company is embarking on a “new journey of biological creation” around the world, pioneering the basic layout and rapidly improving product packages, opening up unlimited development space for the future. The management's multi-level development of strategic thinking and excellent operational capabilities have become Lianlong's business card for sustainable development.

Through mergers and acquisitions, it quickly entered the high-end electronic chemicals business field, forming a dual pattern of R&D and production between China and South Korea. At the beginning of 2024, the company announced that it plans to increase the capital to Yixing Chuangju Electronic Materials Co., Ltd. with 200 million yuan of its own capital. After the capital increase is completed, it will hold 51.18% of Yixing Chuangju's shares, and Yixing Chuangju will wholly acquire 100% of Korea's IPI shares. Through this transaction, the company will increase capital to hold Yixing Chuangju, and Yixing Chuangju will acquire 100% of Korea's IPI shares and build domestic production capacity and domestic R&D bases, forming an R&D and production pattern in parallel between Korea's R&D center and China's R&D center, Korean production capacity, and China's production capacity. According to the “Valuation Report” issued by Walkson (Beijing) International Asset Appraisal Co., Ltd., on the premise of meeting relevant operating expectations, Yixing Chuangju Company (including its 100% controlled IPI company) was valued at 0.3913 billion yuan, of which Korea's IPI was valued at 0.0.1862 billion yuan. The company's current capital increase is a “stuck neck” imported alternative electronic grade PI material, which is widely used in flexible OLED display screens, flexible circuit boards (FPC), high-end thermal insulation and heat dissipation, semiconductor packaging, mobile devices, etc. The products have been verified by Samsung Electronics, Lianmao Electronics and other companies, and mass supply has already begun. The company is expected to quickly enter the high-end electronic chemicals field through mergers and acquisitions. The company has a global operating advantage and has warehouses in regions close to customers to ensure that they meet the demands of global customers for 72-hour supply, rapid response and local service. After more than 20 years of accumulation and development, the company's brand has a high reputation worldwide, rich customer resources, and covers almost all major global polymer materials companies. Through this transaction, it is expected that the company will integrate resources with Yixing Chuangju and Korea's IPI, further open up the global industrial chain, and enhance the company's sustainable profitability.

Maintain a “Highly Recommended” investment rating. The company's revenue for 2024-2026 is estimated to be 6.021 billion yuan, 6.519 billion yuan and 6.911 billion yuan respectively; net profit to mother is 0.427 billion yuan, 0.549 billion yuan and 602 million yuan, respectively; EPS is 1.86 yuan, 2.39 yuan and 2.62 yuan, respectively. The current stock price corresponds to PE of 15.2 times, 11.8 times, and 10.8 times, respectively.

Risk warning: project progress falls short of expectations, raw material prices fluctuate