Incident: Jiemei Technology released its 2024 quarterly report: in 2024, the company achieved revenue of 363 million yuan, yoy +17.87%; net profit to mother of 53 million yuan, yoy +69.19%; net profit after deducting non-return to mother of 53 million yuan, yoy +70.39%.
Comment: Adhering to the horizontal and vertical “industrial chain integration” development concept, the company is the only comprehensive supporting manufacturer in China integrating cutting, drilling, pressing, tape, plastic carrier tape and release film production.
As downstream demand recovered in Q1 2024, order volume recovered steadily and profitability continued to increase. For a long time, I am optimistic that the company will continue to push forward production expansion projects against the backdrop of rising demand recovery for MLCCs, semiconductors, etc., to create a new impetus for growth in the verification of high-end release film products.
1. Net profit increased year over year, gross margin increased year over year, and performance growth was strong.
(1) 2024Q1 order volume steadily rebounded: in 2024, the company achieved revenue of 363 million yuan, yoy +17.87%; net profit to mother of 53 million yuan, yoy +69.19%; net profit after deducting non-return to mother of 53 million yuan, yoy +70.39%. The prosperity of the downstream electronic information industry rebounded, the company's order volume continued to rise, the 24Q1 operating rate increased, and sales revenue increased year-on-year. (2) 2024Q1's gross sales margin reached 39.22%, up 6.81 pct year on year and 3.27 pct month on month, and profitability continued to increase. The company is expected to continue to optimize the layout of the industrial base, promote intelligent manufacturing and fine management, and promote in-depth cooperation with customers; it is expected to continue to optimize the product structure, accelerate the pace of market development for high-value-added products, accelerate the pace of batch supply of self-made base films, and enhance profitability.
2. The production expansion plan has been steadily promoted, and production capacity expansion+product upgrades have been smooth.
(1) The company's fifth electronic base paper production line project began trial production in December 2023. The Jiangxi production base technology reform and upgrading project will help further optimize and improve the strategic layout of the company's production base. The Tianjin production base project has already entered the main construction stage of the project. (2) The “Project to Expand Production of 4.2 Million Rolls of Special Tape for Electronic Component Packaging” is progressing smoothly according to the plan. Additional production lines have been put into operation one after another. Currently, the annual production capacity has reached 3.25 million rolls, laying the foundation for the iterative upgrading of the company's tape products.
(3) The equipment for the BOPET film phase II project has been scheduled. It is expected to be installed by the end of 2024, and the annual production capacity will more than double after completion; (4) The company's cast film was at full production and sales by 23Q4. New energy vehicle production and sales volume led to an increase in orders for cast film for aluminum-plastic film, and customer verification progressed steadily; cast film products for photoelectric displays have gradually been introduced to downstream customers. The second phase of the project is expected to complete installation and commissioning and enter trial production in the second quarter of 2024. After commissioning, the total production capacity will double to 6000 tons per year.
3. High-end release film products promote verification and adhere to the core advantages of technology.
(1) High-end release films promote customer verification: The company has now fully promoted and verified the use of homemade base film release film products on clients, and multi-specification products have passed verification and entered the small-batch trial stage. Since the second half of 2022, the company has been sending samples of its homemade base film to overseas customers. It has now received small-batch orders, and the next step is to enter the gradual volume supply stage; (2) The release volume of medium and high-end release film products is expected to drive future performance to climb: the company's shipments of imported alternative middle and high-end release film products for other uses such as polarizer processes have increased steadily, enhancing the company's profitability. (3) The company firmly focuses on the core advantages of technology. By speeding up the pace of batch supply of self-made base film release films, the company forms a multi-category product layout, and achieves a good trend where carrier products and electronic grade film products go hand in hand with dual-wheel drive.
4. Investment advice: In the context of growing downstream demand, the company is optimistic that the three major businesses will develop collaboratively, continue to expand production, and at the same time develop the downstream semiconductor + release film business, creating a new impetus for growth.
Considering the impact of factors such as fluctuations in downstream demand on the company's performance, we adjusted the company's profit forecast. The net profit for 24-25 is estimated to be 3.51/479 million yuan (the original value was 513/675 million yuan), and the net profit forecast for the additional 26 years is 600 million yuan, maintaining the “buy” rating.
Risk warning: sales fall short of expectations; intense industry competition; risk of exchange rate fluctuations, etc.