occurrences

In the third quarter of 2024, the company achieved double growth in revenue and profit, achieving revenue of 0.425 billion yuan, up 31.60% year on year, up 70.79% month on month; net profit attributable to shareholders of listed companies was 41.7151 million yuan, up 11.07% year on year and 44.27% month on month.

Key investment points

The Vietnam project is being actively promoted and continues to face changes in the competitive landscape. The company established a wholly-owned subsidiary, Vietnam Siquan New Materials Co., Ltd. in Vietnam to invest in the construction of a cooling product project. Currently, the company has selected a plot of land and paid part of the land payment at VSIP Industrial Park in Bac Ninh, Vietnam, and related work is progressing in an orderly manner. The company will continue to be guided by the market and customer needs, consolidate and strengthen long-term strategic cooperation with customers, keep up with the future development direction of world-class customers, actively expand overseas, and further enhance the company's share of clients, product profit margins, and the company's market share. At the same time, the company will continue to accelerate the implementation of the “thermal management materials+thermal management components+thermal management system” product strategy, strengthen strategic cooperation with world-class customers, and provide customers with comprehensive “thermal design+product” solutions and services.

AI consumer terminals promote market space growth, and major customer performance is actively expanding. Driven by the trend of AI technology integration, consumer electronics terminals have ushered in new market opportunities. For example, many internationally renowned technology companies have launched AI phones, AIPC, etc. since this year. They have put forward more stringent requirements for functionality and cooling performance for comprehensive cooling solutions, and the company will also benefit from this and obtain more orders. Orders from major North American customers increased significantly in the third quarter compared to the second quarter. Currently, there are sufficient orders, and the company will further increase this customer's share in 2024.

In the future, the company will continue to strengthen cooperation with leading customers based on R&D innovation and product upgrades.

Investment advice

We expect the company to achieve revenue of 0.64/0.85/1.15 billion yuan in 2024/2025/2026, and realized net profit of 0.07/0.1/0.15 billion yuan respectively. The current stock price corresponding to 2024-2026 PE is 55 times, 39 times, and 26 times, respectively, maintaining a “buy” rating.

Risk warning

Industry and market competition risk; overseas business operation risk; risk of innovation or new products falling short of expectations; risk of fluctuating raw material prices.