Performance reviews

The company announced 24H1 results. 24H1 achieved revenue of 10.76 billion yuan, +1.4% of the year on year, net profit of 0.93 billion yuan, +4.9% year on year; net profit without return to mother of 0.899 billion yuan, +9.2% year on year; of these, 24Q2 achieved revenue of 5.44 billion yuan, -4.6% year on year, +2.3% month on month; net profit to mother of 0.41 billion yuan, -21.8% year on year; net profit from non-return mother 0.38 billion yuan, same Compared to -19.9%. Considering the company's Q2 credit impairment 0.2 billion plus asset impairment of 0.06 billion, the company's operating performance exceeded 0.6 billion, which was better than market expectations.

Q2 film shipments achieved month-on-month growth, and the market share continued to rise to nearly 60%. The company's 24H1 film shipments were 1.39 billion square meters, or +43.6% year over year; of these, Q2 film shipments were 0.71 billion flat (+40.9% YoY, +5.5% month-on-month), and gross margin increased month-on-month; we estimate that the net profit of the company's Q2 film single level was about 0.8 yuan/square meter (not taking into account the impairment caliber, same below). The main reason for the increase compared to Q1 was 1) The 3-4 month EVA film price increase was partially reflected in Q2 performance; 2) Q2 The share of high-profit POE adhesive film shipments increased to more than 50%; 3) The share of customized products shipped by overseas customers increased; the company's Q2 film market share is expected to increase to nearly 60%, and the leading position is further consolidated.

Shipments of electronic materials are growing rapidly, and profitability has improved

The company shipped 0.07 billion square meters of 24H1 photosensitive dry film, with a gross profit margin of 24.1%, an increase of 23.3% over the full year of 23, which mainly contributed to the rapid growth in volume scale; of these, Q2 photosensitive dry film shipments were about 0.042 billion flat (+47.6% YoY, +30.2% month-on-month). We estimate that the company's Q2 photosensitive dry film has a net profit of about 0.6-0.7 yuan/square meter. It has now covered many circuit companies in the Shennan industry such as Pengding Holdings, Shanghai Electric Power Co., Ltd., and Shennan Well-known customers; We expect that with the release of the company's production capacity and the upgrading of the product structure, the company's photosensitive dry film business is expected to double its annual profit in the future.

Downstream component production is expected to increase month-on-month in September, and demand for adhesive film is expected to increase sequentially. Demand for adhesive film is expected to increase month-on-month in September, and demand for adhesive film may pick up. At the same time, the price of EVA particles is already in the lower range. With the arrival of the peak downstream demand season, particle prices may increase. As a leader in adhesive film, the company has continued to prove its alpha attributes for many quarters, and the profitability of film continues to lead the industry; furthermore, the company has strong product development strength, far leading R&D investment scale, and has advantages in product diversity and stability, which is expected to highlight competitiveness in the future era of diversification of battery technology.

Profit forecasting and investment advice

Based on the decline in the company's Q2 film price, we lowered the company's net profit to mother for 2024-2026 to 1.75/2.39/2.72 billion yuan respectively (the value was 2.64/3.19/3.66 billion yuan before 2024-2026), and the current stock price corresponds to PE20.9/15.2/13.4 times. Considering that the company is a leading adhesive film and platform-based company, it has advantages in technology research and development, cost control, supply chain management, etc., and its performance is relatively more certain, and maintains a “buy” rating.

Risk warning

Global PV demand growth falls short of expectations, risk of large price fluctuations in industrial chain, risk of international trade friction, and risk of production capacity construction falling short of expectations.