The company released its 2024 three-quarter report: During the reporting period, the company achieved revenue of 1.058 billion yuan (YoY -6%), achieved net profit of 0.133 billion yuan (YoY +9%), and achieved net profit of 0.129 billion yuan (YoY +14%) after deducting non-return to mother. Among them, 24Q3 achieved revenue of 0.341 billion yuan (YoY -12%, QoQ -12%), realized net profit due to mother 0.037 billion yuan (YoY -22%, QoQ -28%), and realized net profit without deduction of 0.037 billion yuan (YoY -17%, QoQ -24%), falling short of expectations in a single quarter. 24Q3's gross sales margin was 32.41%, with year-on-month changes of +0.31pct and +2.02pct, net profit margins of 10.60%, and -1.49pct and -2.69pct, respectively.

The semiconductor industry continued to boom in 24Q3, but short-term revenue declined due to the transformation of export business, putting pressure on the company's performance. Since 2024, the operating rate of global wafer factories has continued to rise, driving upstream material-side demand. As an important supplier in the domestic electronic specialty segment, the company has achieved customer coverage of more than 90% for domestic 8-inch and above integrated circuit manufacturers. At the same time, it has successfully entered the supply system of leading overseas semiconductor companies such as Intel, Micron, Hynix, and Samsung. The recovery of the industry has driven the company's business to gradually resume growth. However, since 24, the company has gradually switched overseas sales to direct sales through the acquisition of AIG, and the business has been transformed into terminals, directly connecting with customers from major overseas manufacturers such as Intel and Samsung. The early impact of the 24Q3 business transformation was clearly reflected, and the decline in overseas revenue affected the release of the company's performance. However, we believe that after a short period of transformation and pain, the company's overseas business will rapidly recover and grow at an accelerated pace, and profitability is expected to increase significantly.

The high-end application field continues to break through, and the construction of new projects is progressing in an orderly manner. We look forward to the company's long-term growth. The company adheres to a multi-variety specialty gas development strategy, with high-end products as the main focus. Currently, the downstream has basically covered domestic 12-inch fabs. More than 20 products have been supplied to 14nm, 7nm and other production lines, and some fluorocarbon products and hydrides have entered the 5nm advanced process process. In terms of project construction, the infrastructure for the Jiangxi IPO fundraising project was completed and production capacity was released in an orderly manner; in March 2023, the company completed the issuance of convertible bonds to build a semiconductor material project with an annual output of 1,764 tons in Jiujiang, Jiangxi; in addition, the company had project construction plans in Zigong, Sichuan and Rudong, Jiangsu, and the regional strategic layout was continuously improved. In October 2023, the company announced that it plans to invest 0.8 billion yuan to build a semiconductor gas R&D and production center. The implementation of the project will help relieve some of the production capacity pressure at the Foshan headquarters.

Investment analysis opinion: Q3 performance fell short of expectations, and the company's 2024-2026 net profit forecast was lowered to 0.179, 0.248, and 0.339 billion yuan (the original value was 0.233, 0.305, 0.396 billion yuan). The current market value corresponding PE is 35, 26, and 19X, respectively. According to Wind's unanimous expectations, it is comparable to the average PE of the companies Guangzhou Steel Gas and JianghuaWei in 2024, maintaining an “increase in weight” rating.

Risk warning: 1) Downstream demand falls short of expectations; 2) Project progress and product introduction fall short of expectations; 3) Prices of raw materials have risen sharply.