Incident: The company achieved revenue of 0.476 billion yuan in the second quarter, up 17.66% year on year, up 31.04% month on month, and net profit to mother of 0.068 billion yuan, down 1.24% year on year and 27.47% month on month.

The traditional carrier business continued to recover, and the operating rate remained above 80%: the company's revenue continued to recover month-on-month in the second quarter, reaching a new quarterly revenue high since 2022, and the operating rate remained above 80%. Subsequently, with the gradual launch of industries such as new energy, intelligent manufacturing, 5G commercial technology, and switching demand driven by new products such as AI terminal applications, provided a new demand growth point for the electronic components industry.

Major customers in the release film business progressed smoothly, and was gradually released: the company's MLCC release film achieved stable batch supply to major customers such as Guoju, Huaxinke, Fenghua Hi-Tech, and Sanhuan Group. At the same time, it progressed smoothly and entered the small-batch supply stage for major Korean and Japanese customers. At the beginning of August this year, we received a notice from Samsung headquarters that the company has become an official supplier of Samsung release film products. Currently, Samsung has begun placing orders on a monthly basis.

The pressure to increase the price of pulp has eased, and Q3 gross margin is expected to benefit: the company's gross margin increased year-on-year in the first half of the year, and the month-on-month decline was also within a manageable range. The main reason is that the rise in raw wood pulp prices had a certain impact. Recently, the price of wood pulp has declined somewhat. The use of low-price pulp in the third quarter is expected to drive a month-on-month increase in gross margin.

Investment proposal: We expect the company to achieve operating income of 1.989/2.591/2.932 billion and net profit of 0.295/0.437/0.497 billion yuan from 2024 to 2026. The corresponding PE was 24.44/16.50/14.48 times, respectively, maintaining the “gain” rating.

Risk warning: risk of low demand in the component industry; risk of falling carrier product prices; risk of exchange rate fluctuations.