Description of the event
The company achieved revenue of 0.32 billion yuan (+31.5% YoY), realized attributable net profit of 0.041 billion yuan (+52.4% YoY), and realized attributable deducted non-net profit of 0.035 billion yuan (+50.2% YoY). 2024Q2 achieved revenue of 0.19 billion yuan (YoY +24.0%, month-on-month +39.1%), realized attributable net profit of 0.029 billion yuan (YoY +20.9%, +136.8% month-on-month), and realized attributable deducted non-net profit of 0.024 billion yuan (+11.9% YoY, +140.7% month-on-month).
Incident comments
The company is a global manufacturer of new functional coating materials that targets the high-end consumer electronics and passenger car fields. Through an “interactive” independent research and “customized flexible manufacturing” model, the company provides customers with systematic solutions in multiple categories such as coatings, inks, adhesives, etc., focusing on the R&D, production and sales of new functional coating materials in the high-end consumer electronics field and passenger car field.
The company's operations continue to improve. Since 2024, in the field of high-end consumer electronics, the company has been closely monitoring downstream market trends. First, through innovation, it has thoroughly explored the needs of major domestic and foreign 3C strategic end customers represented by major North American consumer electronics customers, Honor, Xiaomi, OPPO, and VIVO, and deepened cooperation using unique product and technological competitive advantages to effectively increase product shipments in the field of mobile phones and related accessories and wearable devices. The high-end consumer electronics sector achieved revenue of 0.27 billion yuan in the first half of the year, an increase of 35.7% over the previous year. Among them, mobile phones and related accessories, laptop and related accessories, wearable devices, and smart home appliances segments achieved year-on-year changes of 32.9%, 6.6%, 77.3%, and -0.4%, respectively. In the passenger car sector, give full play to the benchmark effect of users in the automotive industry, continue to strengthen the market in the field of interior and exterior coatings, and make every effort to implement projects with customers from automotive OEMs and key mold makers, and actively build multiple platform-based products to improve product scale efficiency. The passenger car business achieved a total revenue of 0.047 billion yuan in the first half of the year, an increase of 16.9% over the previous year.
The company achieved gross margin/net profit margin of 50.1%/12.4% in the first half of 2024, an increase of 1.1 pct/2.1 pct over the previous year. The company's R&D expenses ratio was 14.8%. The company has abundant reserves of research projects, covering high-end consumer electronics, passenger cars, special equipment and other fields. The third quarter will gradually enter a period of intensive release of new consumer electronics devices. Coupled with the company's rapid expansion in the consumer electronics and automotive sectors, the company is expected to see a continuous rise in profits.
The company was the first to launch in the field of 3C coatings, with comprehensive coverage. It has achieved effective penetration into well-known domestic and foreign terminal brands such as Apple, HP, Google, Huawei, and Xiaomi, and has begun a global layout to strengthen market development. In the field of automotive coatings, the company aims to enter passenger car interior and exterior coatings. With the two core technical advantages of “PVD coating technology for passenger car parts” and “anti-fog resin and coating technology for passenger car lights,” the company has achieved a double breakthrough in technology and market. The core customers that have supplied or entered the customer system include North American T Company, Valeo, BYD, and NIO. The company has a forward-looking layout of insulation coatings for power batteries and became the world's first “insulating coating material+digital coating technology” systematic solution provider for the power battery industry. In order to meet environmental requirements, the company forwardly lays out water-based coatings to consolidate its leading edge in technology. In addition, the company has made breakthroughs in the fields of aircraft interior coatings, new integrated circuit inks, and the automotive original & aftermarket.
The company is a leading domestic high-end 3C paint company, actively exploring the automotive paint market. Benefiting from the rapid development of new energy vehicles, the company has broad business prospects. With leading technical advantages, the company is expected to complete the domestic replacement of automotive coatings after 3C coatings. Net profit attributable for 2024-2026 is expected to be 0.12/0.16/0.23 billion yuan, respectively, maintaining a “buy” rating.
Risk warning
1. New technology and product development risk; 2. Downstream market demand fluctuation risk; 3. Increased risk of market competition; 4. Product verification falls short of expectations.