Event: On April 23, Jiemei Technology released its report for the first quarter of 2024. In Q1 2024, the company achieved revenue of 363 million yuan, an increase of 17.87% year on year; realized net profit of 53.31 million yuan, an increase of 69.19% year on year; realized net profit after deduction of 52.74 million yuan, an increase of 70.39% year on year.
Q1 The performance was in line with expectations, the profit margin level remained high, and the R&D cost ratio was further increased. In 24Q1, the overall growth rate of the company's revenue and profit was in line with expectations, with a significant improvement over the same period last year. In terms of profitability, the company's Q1 gross margin was about 39.22%, up 6.81 pct year on year, up 3.27 pct month on month, net margin was about 14.68%, up 4.46 pct year on year, and down 3.98 pct month on month. 24Q1 gross margin continued the 23Q4 trend and improved markedly from the same period last year, mainly due to a decline in raw material prices. The net interest rate for 24Q1 decreased compared to 23Q4, mainly due to a sharp increase in R&D expenses of 98.02% year-on-year due to increased investment in R&D and prototyping of new domestic materials such as high-end polyester film during the Q1 period. The 24Q1 R&D cost rate was about 10.65%, an increase of 4.31pct over the previous year.
The recovery in the downstream economy is driving the company's order volume to continue to rise. Increased production capacity, process upgrades, and independent production and substitution of raw materials are expected to support the steady growth of traditional main industries such as sealing tape and tape. Electronic packaging thin carrier tape and encapsulating tape are the company's traditional main business. During the Q1 period, the boom in downstream consumer electronics and other fields continued to recover, and the company's order volume continued to rise, driving steady growth in revenue and profits. In the field of paper carrier tape, the company's fifth special electronic base paper production line was put into trial production in December 2023, and the technical upgrading project of the Jiangxi production base is progressing according to the plan; in the field of plastic carrier tape, the company has achieved independent production of precision molds and black plastic particles and sheets, and some customers have switched to using the company's own black PC particles and homemade sheets; in terms of packaging tape, the “Special Tape Production Expansion Project with an annual output of 4.2 million rolls for electronic component packaging” progressed smoothly, and the new production lines have been put into operation one after another. As of the 23rd year report, the annual production capacity was already in operation. up to 3.25 million volumes. At the same time, the company is carrying out a series of tasks such as upgrading tape production line technology, upgrading production equipment, upgrading plant purification levels, and visual system inspection, which is expected to greatly improve the quality and production efficiency of tape products and lay the foundation for iterative product upgrades. To support overseas customers, the company's production bases in the Philippines and Malaysia have begun construction and upgrading, and the Philippine base is expected to test production in 24Q3. We believe that with the expansion of the company's production capacity and the commissioning of overseas bases, the company is expected to further increase its supply share to overseas customers such as Japan and South Korea, the global market share is expected to continue to increase, and the gross margin of the carrier tape and tape business will further rise.
Release film products continue to develop customers at home and abroad, and the new business is expected to enter a stage of volume growth. At present, the company's MLCC release film has achieved stable batch supply to major customers such as Guoju, Huaxinke, Fenghua Hi-Tech, and Sanhuan Group, while progressing smoothly for major Korean and Japanese customers. As of the 23rd annual report, the MLCC release film is being tested in small batches at Japanese customer Murata, and is expected to be gradually increased; Korean customer Samsung's main testing process has basically been completed, and small-batch orders have been obtained. In the field of cast film, the company's orders for cast film for aluminum-plastic film continue to grow, and customer verification is progressing steadily. The second phase of the cast film project is expected to be tested in 24Q2. After the project is delivered, the company's total cast film production capacity will double, reaching 6,000 tons per year. We believe that with the release of the company's release film production capacity and customer introduction in '24, the membrane materials sector business is expected to enter a phase of volume growth, and the gross margin level is expected to rise to the 10-20% range, further weakening the drag on the company's overall profit.
Investment advice: We adjusted the company's revenue forecast for 2024 to 2026 to 2,112 billion yuan/2,874 billion yuan/3,789 million yuan, and adjusted the company's net profit forecast to 364 million yuan/515 million yuan/698 million yuan, based on the closing price on April 23, corresponding to the 2024 to 2026 forward PE of 23.53 times/16.62 times/12.28 times, respectively, to maintain the “buy” rating.
Risk warning: risk of price fluctuations in upstream raw materials; risk that demand in downstream consumer electronics and other application areas falls short of expectations; the competitive landscape of the industry intensifies risks; the company's new business development progress falls short of expectations