occurrences

Siquan New Materials released its report for the third quarter of 2024: in the first three quarters of 2024, the company achieved operating income of 0.425 billion yuan, an increase of 31.60%; realized net profit attributable to shareholders of listed companies of 0.042 billion yuan, an increase of 10.92% year on year; realized net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss of 0.04 billion yuan, an increase of 8.01% year on year.

Key investment points

Rapid growth in operating income and steady growth in profitability

In the first three quarters of 2024, the company achieved revenue of 0.425 billion yuan, a year-on-year increase of 31.60%; of these, Q3 achieved revenue of 0.208 billion yuan, a year-on-year increase of 62.05%, and net profit to mother of 0.019 billion yuan, an increase of 36.84% year-on-year. As the company closely follows industry trends and optimizes the customer structure, the company's business scope continues to expand, increasing the company's competitiveness. Revenue grew in the first three quarters, and profitability remained stable.

Deeply involved in the thermal management industry, the recovery in consumer electronics has brought about a new round of growth

Demand in the global consumer electronics market continued to pick up in the first three quarters of 2024. According to Canalys data, global smartphone shipments increased 5% year-on-year in the third quarter of 2024 to reach 0.3099 billion, the strongest third-quarter performance since 2021. The company's thermal management products can be widely used in consumer electronic terminals such as mobile phones, laptops, tablets, smart wearable devices, etc., and is one of the few providers in the industry that can provide systematic cooling for consumer electronics. With the recovery of consumer electronics, the company's products have ushered in a new round of demand. In the future, the company will further increase its market share, consolidate and enhance its position in the industry.

New businesses are constantly emerging, increasing the market share of major customers in North America

Since its listing, the company has closely followed industry trends and actively laid out many new products such as cooling fans, liquid silicone, electronic glass, and automotive adhesives through new installations, acquisitions, etc. Through business layout and product planning, the company's “thermal management materials+thermal management components+thermal management system” product strategy and major customer strategy have achieved initial results. Many new businesses have formed mass sales and sufficient orders. At the same time, some new products have entered the certification stage for internationally renowned consumer electronics customers. In addition, orders from major North American customers increased significantly in the third quarter of 2024. Currently, there are enough orders from this major customer, and it is expected that 2024 will further increase the customer's share.

Profit forecasting

The company's revenue for 2024-2026 is 0.58, 0.779, 1.086 billion yuan, and EPS is 1.32, 1.87, and 2.63 yuan, respectively. The current stock price corresponds to PE of 48, 34, and 24 times, respectively. With the recovery of downstream consumer electronics and the continuous development and introduction of the company's new products, the company will benefit from a continuous increase in revenue and profit, and maintain an “increase” investment rating.

Risk warning

Macroeconomic risks, risk of product development falling short of expectations, risk of increased industry competition, risk of downstream demand falling short of expectations.