In the year 24Q1, Lianlong released its quarterly report for the year 24, maintaining the “increase in holdings” rating. 24Q1 achieved revenue of 1,354 million yuan, yoy +14.2%, net profit to mother of 107 million yuan (after deducting 99 million yuan), yoy +29.2% /qoq +33.8% (after deducting yoy +23.6% /qoq +33.8%). Based on the incremental contribution of the new project, the net profit for 24-26 is estimated to be 4.38/5.19/627 million yuan, corresponding EPS of 1.91/2.26/2.73 yuan. Combined with the company's 24-year Wind consensus average of 19xPE, considering that the company's life science and electronic materials business still accounts for a low share of performance, the company is given a 24-year 16xPE with a target price of 30.56 yuan, maintaining a “gain” rating.
Profitability continues to improve in 24Q1. We are optimistic that the company's profit level will continue to improve in the fourth quarter. As production capacity such as the Zhuhai base, Chifeng base, and the second phase of lubricant additives gradually climbed and released, and the prices of the company's main products rose at the bottom, we believe that the company's profit level is expected to continue to improve. 24Q1 The company's comprehensive gross margin was 21.4% (yoy+2.4pct/qoq+0.1pct); the company's sales/management/ R&D/ financial expenses ratio was +0.2/+0.4/+1.7/-0.2pct to 2.8%/4.1%/4.5%/0.8% year-on-year.
The launch of the new project is progressing steadily. The second curve is maturing. The third curve is rapidly changing in terms of lubricant additives. The company's subsidiary Jinzhou Kangtai Phase II 50,000-ton lubricant additive project has been completed and put into operation. Major customers include mainstream domestic and foreign oil companies such as CNPC and Sinopec. According to the General Administration of Customs, the export volume of 2024Q1 lubricant additives in Liaoning Province was 6445 tons, yoy +21.9% /qoq -4.1%, and overseas demand remained stable. In terms of life science, Orive's pilot plant with an annual production of 6 tons of nucleic acid monomers received the first batch of orders in the fourth quarter of '23, and increased its capital to invest in the biological block company Olive in November '23, achieving a complete biological block product layout with the company's third life curve. The rhododendron project has the conditions for industrialization; the polyglutamic acid project has successfully completed the development of a 100L fermentation and purification process, and has pilot amplification conditions; projects such as hyaluronic acid and special amino acids and their derivatives have completed technology introduction.
Proposed merger and acquisition of Korea's IPI to lay out the field of electronics-grade PI
The company announced on January 1, 2024 that it intends to increase capital to its subsidiary Yixing Chuangju and acquire Korea's IPI through Yixing Chuangju. The remaining capital increase will be earmarked for the construction of the YPI production line and TPI coating line in Yixing Chuangju. As of April 18, 66.27% of the share settlement work has been completed. Korea IPI has mature mass-produced TPI films for FCCL, TPI films for QFN packaging, and film heaters. Related products have been verified by Samsung Electronics, Lianmao Electronics, etc., and mass supply has begun. This merger and acquisition will help the company enter the electronic chemicals sector and enhance the company's continued profitability.
Risk warning: the risk that downstream demand will continue to be sluggish; the risk that the progress of new product release will not meet expectations.