Incident: The company released its 2024 three-quarter report. The company achieved total revenue of 0.639 billion yuan, a year-on-year decrease of 63.82%; realized net profit to mother of -0.587 billion yuan, a year-on-year decrease of 348.36%, after deducting non-return profit of -0.623 billion yuan, a year-on-year decrease of 385.79%. In the third quarter of a single quarter, the company achieved revenue of 0.128 billion yuan, a year-on-month decrease of 21.83%, net profit attributable to mother -0.094 billion yuan, and net profit not attributable to mother -0.115 billion yuan. The sharp decline in the company's business situation was mainly affected by poor overall demand in the photovoltaic industry.

The photovoltaic business continued to lose money due to the impact of the industry, and quantitative profit declined sharply. Affected by poor demand in the downstream photovoltaic industry and sluggish inventory removal in the industrial chain, the company's demand for single-crystal drawing consumables is weak, and market sales prices have declined. The company's PV business revenue and gross margin experienced a serious decline. Industry sentiment fell to a freezing point, and the company continued to invest in the photovoltaic industry for the first two years. The utilization rate of newly put into operation was low, and depreciation costs were high, which led to a negative product gross margin. In the first half of the year, the company's PV product revenue was 0.304 billion yuan, a decrease of 62% over the previous year, and the gross margin fell to -23%.

At the same time, due to the continuous decline in industrial chain prices, the company's inventory depreciated by about 0.266 billion yuan in the first three quarters, mainly completing most of the calculation in the second quarter.

The worst time has passed, and the industry is beginning to recover positively. Currently, the photovoltaic industry is at a loss for the entire industry, and the relevant national industry management agencies have given reasonable guidance to the disorderly competition in the industry. We believe that with a steady rebound in PV module prices, there will be a positive recovery process in the profit levels of various upstream sectors (rising prices drive demand back to normal, thereby further stimulating price increases). As a leading company in carbon carbon materials and quartz crucibles, the company's profitability will quickly recover.

Continue to expand new businesses and find new growth points. Although the company's main business has been impacted by the industry and profits have declined, as a new materials platform enterprise, the company continues to improve the performance of improved materials, expand new downstream application fields, and achieve phased results. In the future, as demand in new fields increases, it is expected to support the company's new performance. Currently, in terms of carbon-based materials, the company has obtained fixed targets for mass production projects of carbon ceramic discs for 2 key models from a leading NEV company, and has won the bid in batch orders; completed technical input confirmation and plan review for a model of China Aviation Industry, and began preparing samples and other projects. In terms of resin-based composites, the company completed static testing of the first product of a commercial space rocket fairing project; reached a strategic cooperation with Beijing Xinghe Power Equipment Technology Co., Ltd. to provide resource advantages and platforms for subsequent commercial aerospace projects to enhance brand influence; and completed the delivery of the first batch of airframe structures for a certain type of unmanned helicopter project.

Profit forecast and investment suggestions: The company is a leading domestic enterprise in the fields of carbon and carbon materials, quartz crucibles, and high-speed rail gates. Affected by the industry, it experienced phased losses. EPS is expected to be -1.19 yuan, 0.33 yuan, and 0.66 yuan respectively in 2024-2026, and the corresponding PE is -6/21/10 times, respectively. The company has strong R&D capabilities. As a new material platform company, it is expected to continue to explore new material application fields, so it is recommended to pay attention.

Risk warning: Risk of further deterioration of the competitive pattern in the photovoltaic industry; risk of replacing new quartz crucible technology; risk of blocking the development of new carbon-carbon materials business.