Introduction to this report:

The company's Q1 performance grew month-on-month, and molecular sieve orders and market share in overseas markets continued to increase, and new breakthroughs were made in business development in the petrochemical sector, which is expected to drive the company to continue to grow and maintain its “gain” rating.

Key points of investment:

Maintain an “Overweight” rating. The company's 24Q1 performance was in line with expectations, maintaining the company's EPS of 2.5, 2.9, and 4.6 yuan for 24-25 years and adding 26 years, respectively. Combined with the 2024 PE23X given by comparable companies, the target price was raised to 57.54 yuan (originally 51.38 yuan).

Q1 Performance increased month-on-month, in line with expectations. In 2023, revenue was 0.972 billion yuan, +13.87% YoY; net profit to mother was 0.153 billion yuan, or -22.57% YoY. Among them, 23Q4 revenue was approximately 0.172 billion yuan, -27.01% YoY and -42.94% month-on-month; net profit to mother was 0.017 billion yuan, -72.56% YoY and -71.85%.

Product gross margin was stable, and sales, management and R&D expenses increased by 22.46%. 24Q1 achieved revenue of 0.192 billion yuan, -41.18% YoY, +11.35% month-on-month, and realized net profit to mother 0.032 billion yuan, or -47.74% YoY and +86.01%. It successfully completed the molecular sieve loading of COFCO Group's anhydrous ethanol project with an annual production capacity of 0.24 million tons, broadening the company's product application scenarios. Products such as the fifth-generation special molecular sieve for cryogenic air separation have completed the overall replacement of a 70,000 Nm3/h cryogenic air separation system under Sinopec, and various products have been selected for the first time in Sinopec's collection system, further expanding the petrochemical business.

Overseas market expansion has achieved remarkable results, and the market share continues to increase. 24Q1 achieved export revenue of about 50.0372 million yuan, +19.63% year-on-year. Thailand's Jianlong has continued to increase orders for molecular sieves in Europe, America and Southeast Asia, and the market share of methane purification zeolite products in Southeast Asia has increased significantly. Thailand (Phase II) plans to complete project construction by the end of 2024 to further enrich the product range with overseas production capacity.

Catalysts: Downstream industrial demand exceeded expectations, expansion in new fields exceeded expectations, and overseas market development exceeded expectations.

Risk warning: Project construction progress falls short of expectations, and downstream demand and overseas market development fall short of expectations.