The company released its 2024 three-quarter report: During the reporting period, the company achieved revenue of 1.498 billion yuan (YoY +11%), achieved net profit of 0.181 billion yuan (YoY -20%), and achieved net profit of 0.169 billion yuan (YoY -24%) after deducting non-return to mother. Among them, 24Q3 achieved revenue of 0.526 billion yuan (YoY +14%, QoQ +3%), realized net profit of 0.046 billion yuan (YoY -33%, QoQ -34%), and realized net profit of 0.038 billion yuan (YoY -42%, QoQ -42%) in a single quarter, falling short of expectations. 24Q3's gross sales margin was 24.01%, with year-on-month changes of -7.75pct and -5.43pct, net margin of 9.04%, and year-on-month changes of -5.74pct and -4.36pct, respectively. The total sales, management, R&D and financial expenses ratio of the 24Q3 company was 15.35%, with year-on-month changes of +0.55pct and +1.46pct, respectively. The company's profitability declined significantly in 24Q3 compared to the same period last year. We think the main reasons are:

1) The price of helium fell significantly year on year, and the company's general cooperation accounted for a large share, and price adjustments lagged behind the market, causing the month-on-month pressure to remain under pressure; 2) As many on-site gas production projects entered commercialization one after another, depreciation and amortization, and expenses during the early commissioning and climbing phase had an impact on performance.

Helium price adjustments are gradually coming to an end, and the share of on-site gas production business is steadily increasing. We are optimistic that the company's new project orders will land under a new round of domestic capital expenditure. Since 2024, the price of helium has remained in a downward phase. According to Baichuan Yingfu data, the price of helium (40L/bottle, factory price including tax) fell from 1,000 yuan/bottle at the beginning of the year to 750 yuan/bottle at the end of Q2, and the price has remained stable since Q3. However, since the company's downstream helium customers are mainly orders from Changxie, the pace of price adjustments lags behind market changes. As a result, Q3 prices were still lowered, which affected the profit margin level. However, it is worth noting that in the face of damage to the helium gas business, the company's revenue has continued to grow. We believe that it mainly relies on the continuous commercialization of on-site gas production projects, the Hefei Comprehensive Insurance Zone, Hefei Changxin Phase II, Beijing Changxin Power Collection, Shanghai Dingtai ingenuity, etc., as well as Beijing Electric Collection, Fang Zhengwei, and Wuhan Chuxing (Phase I) since 24. As these projects gradually get on track, the company's performance is expected to maintain steady growth. Over the past 24 years, the company has successively obtained electronic bulk gas projects such as Wuhan Chuxing (Phase II) and Zhuhai Huacan, and successfully won the bid for the supporting air separation project for the Chifeng Jintong Phase II copper smelting project. Looking ahead, the domestic semiconductor and panel sector has ushered in a new round of capital expenditure. As a leading comprehensive electronic gas integrated service provider in China, the company is expected to fully benefit. As of the three-quarter report of '24, the company's fixed assets were 3.153 billion yuan, and projects under construction were 0.675 billion yuan.

Build an autonomous and controlled equipment manufacturing and production base to consolidate advantages in the field of on-site gas generation; develop electronic specialty gas products based on the electronic bulk gas core industry and create a new strategic growth pole. In February 2024, the company and the Jiande Municipal People's Government signed the “Investment Agreement for the Air Separation Gas Intelligent Equipment Manufacturing Base Project” to establish and master the core design technology R&D and manufacturing capabilities of its own equipment, and further enhance its competitive advantage. The project officially laid the foundation for construction during the reporting period. At the same time, relying on customer stickiness in the on-site gas production business and in-depth understanding of customer business, it is planned to gradually expand the electronic specialty gas business. It is proposed to invest no more than 534.75 million yuan in the Chifeng nitrogen trifluoride electronic special gas R&D and production project (3000t/a), and no more than 393.24 million yuan for electronic specialty gas R&D and production projects in the Hefei Economic Development Zone. The products include various core products such as C4F6, HCl, and HBr. During the reporting period, two electronic special gas projects were officially implemented, which are expected to become the company's new strategic growth poles in the future.

Investment analysis opinion: The reduction in helium gas prices has put pressure on performance. After the new on-site gas production project is put into operation, we have lowered the growth rate and gross profit margin of the company's helium business, slightly lowered the gross profit margin of the on-site gas business, and lowered the net profit forecast for 2024-2026 to 0.246, 0.357, and 0.514 billion yuan (the original values were 0.321, 0.449, 0.608 billion yuan). The current market value corresponds to PE 49, 34, and 23X, respectively. We are optimistic about the company's large-scale electronic on-site gas production business model. Arrived With the steady increase in gas consumption for commercial projects and the implementation of subsequent tenders for new projects, performance is expected to be gradually released. According to Wind's unanimous expectations, the average PE of the companies CSIC and Walter Gas in 2024 is 54X, maintaining an “gain” rating.

Risk warning: 1) Construction progress of on-site gas production projects and customer gas consumption after production fall short of expectations; 2) downstream capital expenditure has slowed down, and the company's new project orders fall short of expectations; 3) helium prices fluctuate greatly.