Brief performance review

On the evening of October 29, the company disclosed its quarterly report for the year 24. From 1 to 3Q24, the company achieved revenue of 2.9 billion yuan, +19.6% year over year; net profit to mother was 0.38 billion yuan, +21.7% year over year. Among them, Q3 achieved revenue of 0.63 billion yuan, or -3.1% YoY; realized net profit of 0.05 billion yuan to mother, or -48.1% YoY.

Management analysis

The company is one of the few in China that is involved in the bulk gas and electronic gas business at the same time, and insists on joint efforts horizontally and vertically. Currently, the company provides semiconductor customers with comprehensive gas solutions in multiple dimensions of electronic specialty gases, electronic bulk carriers, and TGCM. Through active market development, gas sales increased 18.1% year-on-year from 1 to 3Q24, and specialty gas/ bulk gas/ on-site gas/ gas revenue accounted for 41.6%/38.5%/11.3%/8.5%, respectively.

Market competition intensified, and the overall gross margin of the product declined. Affected by new production capacity investment and increased competition in the industry, prices for some of the company's products fell, causing the 3Q24 comprehensive gross margin to drop to 30.7% (-6.5 pct year on year). Pay attention to the increase in technology premiums for the company's newly developed products and the restoration of gross margin after product diversification.

Profit Forecasts, Valuations, and Ratings

We expect the company to achieve net profit of 0.32/0.4/0.53 billion yuan from 2024 to 2026, and EPS of 0.66/0.83/1.09 yuan, respectively. The corresponding PE is 29 times, 24 times, and 18 times, respectively, maintaining a “buy” rating.

Risk warning

Downstream demand for electronic special gas has decelerated, competition in some categories of electronic special gas has intensified, downstream demand for bulk gas has fallen short of expectations, and progress of new projects has fallen short of expectations.