Incident: The company released its 2024 three-quarter report. In the first three quarters of 2024, it achieved revenue of 0.273 billion yuan, an increase of 10.53% year on year; realized net profit to mother of 0.057 billion yuan, an increase of 37.25% year on year; realized deducted non-net profit of 0.049 billion yuan, an increase of 22.11% year on year. In Q3 2024, we achieved revenue of 0.1 billion yuan, up 15.29% year on year and 8.26% month on month; realized net profit to mother of 0.021 billion yuan, up 32.20% year on year and 9.63% month on month; realized deducted non-net profit of 0.018 billion yuan, up 31.32% year on year, up 18.15% month on month.

The company's profitability continued to improve, and product shipments increased steadily: the company's revenue maintained steady growth in the first three quarters of 2024, mainly due to the year-on-year increase in the company's product sales in the first three quarters. Among them, overall shipments increased by more than 33% year on year, shipments of core product-level copper specialty electronic chemicals steadily increased, and electroplating additives increased significantly. The company's gross margin for the first three quarters of 2024 was 39.10%, +3.05pct; the net margin was 20.93%, +4.07pct; the 2024 Q3 gross margin was 40.12%, +2.77pct, +1.87pct month-on-month; the net margin was 20.44%, +2.61 pcts yoy, +0.25pct month-on-month.

The company's profit side grew rapidly in the first three quarters, mainly due to an increase in sales share of high-margin products in the company's main business, and an increase in capital raised wealth management income and interest on bank deposits. The company's sales/management/R&D/finance expense ratios for the first three quarters of 2024 were 6.42%/5.99%/6.84%/-0.76%, respectively, with a year-on-year change of +0.47/-0.15/+0.47/+0.05pct.

The full PCB coverage capacity continues to expand, and overseas platforms have begun to ship in small quantities: the company has become a core domestic supplier in the field of PCB formulation-based electronic chemicals. With the establishment of the semiconductor division and the completion of the second phase factory, the company has expanded from the ability to fully cover PCBs (including packaging substrates) to the field of advanced packaging and wafer-level electroplating, and strives to expand into the semiconductor chip field. The company set up an overseas platform in the first half of this year. Recently, it has begun to ship small quantities to Southeast Asian factories of core customers such as Ding Ying and Otus. Currently, the main export products are PCB-related products, which will later be extended to global sales of pan-semiconductor products. We believe that as the development of AI technology increases demand for high-end PCBs, the company is expected to continue to benefit from the long-term growth in demand brought about by the expansion of localization and substitution under the company's innovation-driven development.

The development of advanced packaging products is in line with expectations. The company's advanced packaging products mainly focus on products such as electroplated copper columns, rewiring layers, silicon holes, and glass through hole filling electroplating. Related products and technologies have completed recipe development and continue to be verified in downstream customer production lines, and currently meet customer expectations. The company is committed to becoming the main supplier for mainstream international and domestic packaging and testing customers within the next 2 years, and aims to achieve more than 30% of the domestic market share of electroplating additives from advanced packaging to wafer manufacturing within 3 years. The company hired Dr. Han Zuoyan as the company's new CTO and head of the semiconductor division. It has now formed a semiconductor team including R&D, production, quality, and sales, and formed a complete semiconductor division operation mechanism. It has achieved full coverage of electroplating products from advanced packaging to advanced processes, and expanded the ability of formula-based electronic chemicals to fully cover PCBs (including packaging substrates) to the chip field, while establishing the company's new high-end material research and development platform to continue to drive the company's core internal driving force in the future. In terms of TGV electroplating products, it is currently undergoing continuous testing and verification with many downstream customers, and has also achieved small-batch product sales. Currently, it is cooperating with equipment manufacturers and customers to actively promote the mature implementation of related technologies.

Maintaining the “buy” rating: We are optimistic that the company's independent innovation will drive the continuous introduction of top talents and teams, actively promote the expansion of electronic chemicals-related application fields, and accelerate the layout of the integrated circuit field. With the development of the domestic electronic circuit industry, the company is expected to fully benefit from the expansion of demand for localized substitution in the future. The company's net profit from 2024 to 2026 is estimated to be 0.078 billion yuan, 0.11 billion yuan, and 0.145 billion yuan, EPS is 1.34 yuan, 1.90 yuan, and 2.49 yuan, respectively. The corresponding PE is 88X, 63X, and 48X, respectively.

Risk warning: risk of macroeconomic fluctuations, risk of increased market competition, risk of exchange rate fluctuations, risk of raw material price fluctuations.