| 恒生指数 | 21417.4 | | --- | --- | | 目标价（港元） | 7.31 港元 | | 潜在涨幅/跌幅 | 106.5% | | 市场数据 | | | 收盘价 | 3.54 港元 | | 52 周最高/最低价(港元) | 4.8/3.36 | | --- | --- | | 总市值（亿港元） | 43.86 | | 流通市值（亿港元） | 43.86 | 股价相对走势 证券研究报告 | 公司研究报告 材料 | 新材料 · | 涨跌幅% | 1m | 3m | 1y | | --- | --- | --- | --- | | 绝对表现 | -8.76 | 0.00 | -3.80 | | 相对表现 | 1.85 | -13.47 | -3.41 | 资料来源：Wind 资讯、盈立证券 投资评级（推荐） 环球新材国际（6616.HK） 2025 年4月14 日 护城河优势凸显，外延式并购开启发展新篇章 核心观点 ❑ 风险提示：宏观经济与下游行业波动风险、跨国收购相关风险、产业协同与成本控制风险 | 证券分析师 | 公司核心财务数据预测 | | | | | | | --- | --- | ...

证券研究报告 | 公司研究报告 投资评级（推荐） 环球新材国际（6616.HK） 材料 | 新材料 · | 恒生指数 | 21417.4 | | --- | --- | | 目标价（港元） | 7.31 港元 | | 潜在涨幅/跌幅 | 106.5% | | 市场数据 | | | 收盘价 | 3.54 港元 | | 52 周最高/最低价(港元) | 4.8/3.36 | | --- | --- | | 总市值（亿港元） | 43.86 | | 流通市值（亿港元） | 43.86 | 股价相对走势 | 涨跌幅% | 1m | 3m | 1y | | --- | --- | --- | --- | | 绝对表现 | -8.76 | 0.00 | -3.80 | | 相对表现 | 1.85 | -13.47 | -3.41 | 资料来源：Wind 资讯、盈立证券 2025 年4月14 日 护城河优势凸显，外延式并购开启发展新篇章 核心观点 ❑ 风险提示：宏观经济与下游行业波动风险、跨国收购相关风险、产业协同与成本控制风险 | 证券分析师 | 公司核心财务数据预测 | | | | | | | --- | --- | ...

Group 1 - The company achieved a revenue of 1.649 billion yuan in 2024, representing a year-on-year growth of 55.0%, and a net profit of 242 million yuan, up 33.4%, with a gross margin reaching a historical high of 53.0% [1] - The core business of the company, pearlescent pigments, accounts for over 90% of total revenue, with natural mica-based pearlescent pigments being the largest source at 43.2% [2] - The company has expanded its product offerings to over 2,000 types, focusing on high-end products such as aluminum oxide and silica-based pigments, which have seen a year-on-year growth rate exceeding 200% [2] Group 2 - The company launched a new 30,000-ton high-end pearlescent materials smart factory in 2024, focusing on high-value products for automotive and cosmetics [3] - The company is pursuing a global strategy by integrating with Korean CQV and planning to acquire German Merck's surface solutions business, which is expected to enhance its market presence in Europe [3] - The company’s net profit from CQV increased significantly by 170.5% in 2024, highlighting the effectiveness of the synergy [3] Group 3 - The company’s growth in 2024 is attributed to technological breakthroughs and a relentless pursuit of color aesthetics, alongside a global perspective [4] - The completion of the acquisition of Merck's surface materials business and the introduction of new production capacity are expected to deepen the company's exploration at the intersection of art and technology [4]

Financial Performance - Revenue for the fiscal year 2024 was approximately RMB 1,648.8 million, an increase of about 55.0% compared to RMB 1,064.1 million in fiscal year 2023[4] - Gross profit for fiscal year 2024 was approximately RMB 873.7 million, up about 65.4% from RMB 528.3 million in fiscal year 2023, with gross margins of approximately 53.0% and 49.7% respectively[4] - Profit attributable to owners of the company for fiscal year 2024 was approximately RMB 242.2 million, a 33.4% increase from RMB 181.6 million in fiscal year 2023, with net profit margins of approximately 19.4% and 20.0% respectively[4] - EBITDA for fiscal year 2024 was approximately RMB 612.9 million, an increase of about 65.9% from RMB 369.6 million in fiscal year 2023[4] - The company reported a total comprehensive income of RMB 268.1 million for fiscal year 2024, compared to RMB 209.9 million in fiscal year 2023[6] - The net profit for the fiscal year 2024 was approximately RMB 320.3 million, reflecting a year-on-year growth of about 50.2%[39] - Segment profit for the year 2024 was RMB 443,441 thousand, up 61% from RMB 275,506 thousand in 2023[24] - The company reported a net profit after tax of RMB 320,272 thousand for 2024, an increase of 50% from RMB 213,285 thousand in 2023[24] Assets and Liabilities - Total assets as of December 31, 2024, amounted to RMB 7,054.5 million, compared to RMB 5,155.3 million as of December 31, 2023[7] - Total liabilities rose to RMB 2,701,383 thousand in 2024, up from RMB 1,070,137 thousand in 2023, indicating an increase of 152%[25] - The company's total liabilities to assets ratio increased to approximately 34.3% as of December 31, 2024, compared to 17.7% on December 31, 2023, due to an increase in bank loans and other borrowings[83] - Non-current assets increased to RMB 2,731.9 million in fiscal year 2024 from RMB 1,319.9 million in fiscal year 2023[7] - Current assets totaled RMB 4,322.6 million as of December 31, 2024, compared to RMB 3,835.3 million in the previous year[7] Revenue Breakdown - The revenue from pearlescent pigment products reached RMB 1,528,263,000 in 2024, up from RMB 964,003,000 in 2023, indicating a growth of about 58%[18] - Revenue from external customers in China for 2024 was RMB 1,358,357 thousand, representing a 41% increase from RMB 961,325 thousand in 2023[26] - Revenue from the Korean operations increased significantly to approximately RMB 316.6 million in fiscal year 2024, representing 19.2% of total revenue, compared to 9.7% in the previous year[49] - The revenue breakdown by product for fiscal year 2024 shows that natural mica-based pearlescent pigments generated RMB 712.4 million (43.2%), synthetic mica-based pigments RMB 518.2 million (31.4%), and glass flake-based pigments RMB 142.2 million (8.6%) [50]. Costs and Expenses - The company’s financing costs increased to RMB 118.4 million in fiscal year 2024 from RMB 51.4 million in fiscal year 2023[5] - Research and development expenses for 2024 amounted to RMB 89,540 thousand, compared to RMB 75,018 thousand in 2023, reflecting a growth of 19%[31] - Administrative and other operating expenses rose from approximately RMB 188.6 million in FY2023 to approximately RMB 262.4 million in FY2024, an increase of about 39.1%[63] - Other income and losses decreased from approximately RMB 28.0 million in FY2023 to approximately RMB 2.4 million in FY2024, primarily due to increased foreign exchange losses[60] Strategic Initiatives - The company is pursuing a strategic acquisition of the global surface solutions business, which is expected to enhance its market resources and international presence[41] - The company has entered into an agreement to acquire part of Merck KGaA's global surface solutions business, indicating a strategic move for market expansion[89] - The company agreed to acquire the global surface solutions business for a total consideration of €665,000,000 (approximately RMB 5,187,000,000 or HKD 5,586,000,000), to be paid in cash[90] - The company plans to enhance its global sales pipeline integration to ensure efficient market reach and customer engagement[76] - The company aims to implement a "Materials + Innovation + Full Scenario" strategy, focusing on green manufacturing, advanced materials, and intelligent applications to drive growth towards 2025[75] Corporate Governance - The company has established an audit committee consisting of three independent non-executive directors to oversee financial reporting and risk management[101] - The company is committed to high standards of corporate governance to protect shareholder interests and enhance corporate value[98] - The board of directors includes executive directors such as Mr. Su Ertian (Chairman and CEO) and Mr. Jin Zengqin[106] Market and Product Development - The company launched five innovative product series and ten annual trending colors at the 2024 "Brilliant New Colors" product launch event, enhancing its product line significantly[42] - The group has developed new energy materials with high-temperature resistance up to 1,150℃ and high-voltage breakdown resistance of 20KV/mm, indicating advancements in product technology[51] - The total number of pearlescent pigment products offered by the group reached 993 as of December 31, 2024, including 472 synthetic mica-based products, 94 glass flake-based products, and 21 silica-based products[43][44]. Employee and Operational Metrics - The company employed 693 employees in mainland China, 15 in Hong Kong, and 193 in South Korea as of December 31, 2024, compared to 589, 9, and 171 respectively on December 31, 2023[93] - The average number of ordinary shares outstanding increased to 1,238,870,132 in 2024 from 1,208,799,000 in 2023, reflecting an increase of approximately 2.5%[33] Future Outlook - Future outlook includes potential new product launches and technological advancements[106] - The company is focused on strategic expansion and enhancing its market presence[106] - The company aims to improve user data analytics to drive better decision-making[106] - There is an emphasis on mergers and acquisitions to strengthen market position[106]

Investment Rating - The report assigns a "Buy" rating to the company with a target price of 7.81 HKD, indicating a potential upside of 119% from the current price [4][6]. Core Insights - The company has established itself as a leading player in the pearl material industry, with a strong focus on R&D and innovation, and a robust global sales network [2][3]. - The pearl materials market is experiencing rapid growth, driven by increasing demand in various applications, particularly in cosmetics and automotive sectors [2][20]. - The company has demonstrated strong financial performance, with a revenue CAGR of 24.7% from 2019 to 2023, and a gross margin consistently around 50% [2][15]. Summary by Sections Company Overview - Established in 2011, the company specializes in R&D, production, and sales of pearl materials and synthetic mica, with over 2,000 products and a global sales network [2][8]. - The company has received multiple accolades, including "National Green Factory" and "Top 500 Most Valuable Brands in China" [8]. Market Dynamics - The pearl materials industry is rapidly expanding, with China's market size reaching 6.47 billion RMB, accounting for 28% of the global market [2][22]. - Synthetic mica-based pearl materials have seen a CAGR of 31.7% from 2016 to 2023, indicating strong demand growth [2][20]. R&D and Competitive Advantage - The company invests heavily in R&D, with a 40% increase in R&D spending in the first half of 2024, leading to the launch of over 100 new products annually [3][48]. - The company has built a strong technological moat in synthetic mica production, supported by patents and innovative processes [3][57]. Financial Performance - The company achieved a revenue of 1.056 billion RMB in 2023, with a projected revenue of 1.571 billion RMB in 2024, reflecting a growth rate of 48.74% [4][15]. - The net profit for 2023 was approximately 213 million RMB, with a projected net profit of 340 million RMB in 2024, indicating a growth rate of 59.21% [4][15]. Future Outlook - The company is expected to benefit from the ongoing expansion of the pearl materials market, particularly in high-end applications [2][20]. - The acquisition of CQV and the planned acquisition of Merck's surface solutions business are anticipated to enhance the company's market position and operational synergies [3][4].

Investment Rating - The investment rating for the company is "Outperform" [1] Core Insights - The company is a leading producer of pearlescent pigments in China, with a comprehensive product range that includes over 2000 varieties across high, medium, and low-end categories, serving various industries such as coatings, automotive paints, cosmetics, aerospace, and more [2][3] - The company has successfully integrated the acquisition of CQV and is in the process of acquiring Merck's surface solutions business for €665 million, which is expected to enhance its market position and customer-centric strategy [3] - The company has commercialized synthetic mica-based fire-resistant materials for new energy batteries, marking a significant breakthrough in its R&D efforts [3] - Profit forecasts indicate a net profit of 304 million, 440 million, and 551 million RMB for 2024, 2025, and 2026 respectively, with a projected PE valuation of 20-22 times for 2024 [3][4] Financial Performance - The company reported total revenue of 910 million RMB in 2022, with a projected increase to 1056 million RMB in 2024, reflecting a year-on-year growth of 16% [4][5] - The gross profit margin is expected to stabilize around 48% to 49.5% from 2024 to 2026 [6][8] - The company's net profit margin is projected to improve from 17.19% in 2023 to 27.76% by 2026 [8] Market Position and Competitors - The company has established a global marketing network, exporting products to over 100 countries and regions [2] - Comparatively, the company's valuation metrics are competitive against peers in the industry, with a projected PE ratio that aligns with market averages [7]

Market Expansion and Product Development - In the first half of 2024, the company achieved significant market expansion in the surface performance materials sector, driven by high-quality product offerings and services, resulting in strong performance growth in both domestic and international markets[4]. - The company launched 5 new product series and 10 trending colors during the Spring 2024 "Brilliant Renewal" product launch event, which received positive feedback at major industry exhibitions[4]. - The annual production capacity of the new pearl material plant in Guangxi has reached 30,000 tons, and the surface performance materials project in Tonglu, Hangzhou, has commenced with a planned capacity of 100,000 tons[4]. - The company is committed to a strategy of "internal development and external expansion," focusing on high-quality growth and technological innovation in the high-end materials sector, particularly in pearl pigments and related functional materials[5]. - The company aims to establish a high-level, high-quality development ecosystem in the surface performance new materials industry, supporting its goal of becoming a leader in this sector[5]. - The company has successfully alleviated capacity bottlenecks through the implementation of multiple major projects, enhancing its industrial chain[4]. Financial Performance - In the first half of 2024, the company's revenue reached approximately RMB 774.6 million, representing a year-on-year increase of about 66.8%[6]. - Net profit for the first half of 2024 was approximately RMB 144.5 million, reflecting a year-on-year growth of about 52.7%[6]. - The EBITDA for the first half of 2024 was approximately RMB 266.8 million, an increase of about 63.1% compared to approximately RMB 163.6 million in the first half of 2023[6]. - Gross profit for the first half of 2024 was approximately RMB 388.0 million, up 72.8% from RMB 224.5 million in the first half of 2023[23]. - Gross margin improved slightly to 50.1% in the first half of 2024 from 48.4% in the same period of 2023, attributed to lower raw material costs[23]. - Profit for the first half of 2024 was approximately RMB 144.5 million, representing an increase of about 52.7% compared to approximately RMB 94.7 million in the first half of 2023, with a net profit margin decreasing to about 18.7% from 20.4%[30]. International Strategy and Acquisitions - Following the acquisition of CQV Co., Ltd., the company has seen steady improvement in operational performance and significant synergy effects in market channels, product development, and supply chain management[5]. - The acquisition of CQV has resulted in approximately RMB 164.3 million in revenue from the Korean operations, accounting for about 21.2% of the total revenue for the first half of 2024[12]. - The company is advancing its international strategy, enhancing collaboration in product development, sales channels, and supply chain management with CQV[10]. - The company is focused on internationalization and group operations as a key strategy for 2024, aiming to explore pathways for international market development[5]. - The company has agreed to acquire the global surface solutions business for a total consideration of €665 million, equivalent to approximately RMB 5.187 billion or HKD 5.586 billion[49]. Research and Development - The company has added 3 new patents and 3 new registered trademarks in the first half of 2024, bringing the total to 154 patents and 73 trademarks[9]. - The company aims to strengthen its research and development investments across five strategic directions, including new materials and applications, to enhance its technological competitiveness[55]. - Research and development expenses increased to RMB 34,138,000 for the six months ended June 30, 2024, up from RMB 24,381,000 in the same period of 2023, reflecting a growth of about 40%[81]. Operational Efficiency and Cost Management - Sales expenses for the first half of 2024 increased by approximately 107.0% to about RMB 50.0 million from approximately RMB 24.2 million in the first half of 2023, primarily due to increased expenses from the new subsidiary CQV and higher sales and transportation costs[26]. - Administrative and other operating expenses rose by approximately 63.9% to about RMB 107.2 million in the first half of 2024, up from approximately RMB 65.4 million in the same period of 2023, mainly due to the inclusion of CQV's expenses of RMB 22.8 million and professional service costs related to the acquisition of global surface solutions[27]. - Financial costs increased by approximately 98.8% to about RMB 42.7 million in the first half of 2024 from approximately RMB 21.5 million in the same period of 2023, primarily due to increased bank loans and interest expenses from the initial bond issuance[28]. Shareholder and Corporate Governance - The company expresses gratitude to its management, employees, shareholders, and business partners for their continued support and confidence in its future growth[5]. - The company decided not to declare any interim dividend for the first half of 2024, consistent with the previous year[38]. - The company is committed to high standards of corporate governance to protect shareholder interests and enhance corporate value[8]. - The roles of Chairman and CEO are currently held by the same individual, Mr. Su, to ensure consistent leadership and effective strategic planning[9]. Cash Flow and Capital Management - As of June 30, 2024, the company's bank and cash balance was approximately RMB 3,436.6 million, an increase from RMB 3,203.5 million as of December 31, 2023[38]. - The net cash generated from operating activities for the six months ended June 30, 2024, was RMB 194,824,000, an increase from RMB 141,557,000 in the same period of 2023, representing a growth of approximately 37.5%[65]. - The company incurred net cash used in investing activities of RMB 399,488,000 for the six months ended June 30, 2024, compared to RMB 133,301,000 in the same period of 2023, indicating a significant increase in investment activities[65]. - The net cash generated from financing activities was RMB 438,174,000 for the six months ended June 30, 2024, compared to RMB 155,328,000 in the same period of 2023, showing an increase of approximately 182.5%[65]. Shareholding Structure - As of June 30, 2024, Mr. Su holds a total of 301,155,800 shares, representing 24.31% of the company[114]. - Ms. Wang holds 421,782,948 shares, which accounts for 34.04% of the company[119]. - The total number of shares held by major shareholders includes 301,155,800 shares from Hongzun International, representing 24.31%[119]. - The company has multiple controlled corporations with significant shareholdings, indicating a concentrated ownership structure[118].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 5.4, indicating a potential upside of 38% from the current price of HKD 3.89 [4][2][8]. Core Insights - The company reported a strong revenue growth of 66% year-on-year for the first half of 2024, reaching HKD 770 million, with a net profit of HKD 107 million, up 26% year-on-year [1][2]. - The acquisition of a 42% stake in CQV has positively impacted revenue, with a comparable growth rate of 31.5% when excluding the consolidation effect [1]. - The company has expanded its production capacity with the commissioning of a new plant, expected to contribute an additional 6,000 tons of pearl pigment output in 2024 [1][2]. Revenue Performance - Revenue for the first half of 2024 was HKD 770 million, a 66% increase compared to the previous year [1]. - The revenue from synthetic mica pearlescent pigments was HKD 269 million, up 46%, while natural mica pearlescent pigments generated HKD 278 million, a 37% increase [1]. - The sales volume of pearlescent pigments reached 11,400 tons, a 24% increase, with an average selling price of HKD 61,000 per ton, up 7.5% [1]. Profitability Metrics - The gross margin improved to 50.1%, an increase of 1.6 percentage points year-on-year, driven by lower raw material costs and an enhanced product mix [1]. - Selling expenses increased, with a ratio of 6.5% of revenue, reflecting higher costs associated with the CQV acquisition [1]. - The report forecasts net profits for 2024, 2025, and 2026 to be HKD 300 million, HKD 350 million, and HKD 430 million, respectively, with corresponding EPS of HKD 0.20, HKD 0.24, and HKD 0.30 [2][3]. Capacity Expansion - The company’s existing production capacity for pearlescent pigments is 18,000 tons, nearing full capacity, with a new plant launched in February 2024 designed for 30,000 tons [1]. - The new facility is noted to be the largest and most advanced in the world, focusing on high-end automotive and cosmetic-grade pearlescent pigments [1]. Valuation Analysis - The report employs comparable company analysis and DCF methods for valuation, suggesting a target price of HKD 5.4 based on a PE multiple of 20x for 2025 [8]. - The DCF analysis estimates a market value of HKD 7.076 billion, translating to a target price of HKD 5.9, considering a WACC of 7.7% and growth rates of 5% in the short term and 2% in the long term [8][10].

Financial Performance - Revenue for the first half of 2024 was approximately RMB 774.6 million, an increase of about 66.8% compared to RMB 464.3 million in the first half of 2023[2] - Gross profit for the first half of 2024 was approximately RMB 388.0 million, up approximately 72.8% from RMB 224.5 million in the first half of 2023, with gross margins of 50.1% and 48.4% respectively[2] - Profit for the period was approximately RMB 144.5 million, a 52.7% increase from RMB 94.7 million in the first half of 2023[2] - Profit attributable to owners of the company was approximately RMB 107.1 million, an increase of about 26.4% from RMB 84.7 million in the first half of 2023[2] - Basic and diluted earnings per share for the first half of 2024 were both RMB 0.09, compared to RMB 0.07 in the first half of 2023[3] - The company reported total revenue of RMB 774,622,000 for the six months ended June 30, 2024, representing a 66.7% increase from RMB 464,324,000 in the same period of 2023[20] - The net profit for the first half of 2024 was approximately RMB 144.5 million, reflecting a year-on-year growth of about 52.7%[42] - The EBITDA for the first half of 2024 was approximately RMB 266.8 million, an increase of about 63.1% compared to approximately RMB 163.6 million in the first half of 2023[42] Revenue Breakdown - Revenue from pearl pigment products reached RMB 701,155,000, up from RMB 421,943,000, indicating a growth of 66.1% year-over-year[20] - Revenue from the Chinese business operations accounted for approximately 78.8% of total revenue in the first half of 2024, with an increase of about 31.5% to approximately RMB 610.4 million[49] - The company recorded revenue of approximately RMB 164.3 million from its Korean operations, contributing about 21.2% to total revenue in the first half of 2024[49] - The company's external customer revenue from China operations was RMB 610,370,000 and from South Korea operations was RMB 164,252,000 for the reporting period[18] Assets and Liabilities - Total assets as of June 30, 2024, amounted to RMB 5,863.4 million, an increase from RMB 5,155.3 million as of December 31, 2023[6] - Current assets totaled RMB 4,268.9 million as of June 30, 2024, compared to RMB 3,835.3 million at the end of 2023[6] - The company's total equity attributable to owners was RMB 4,213.6 million as of June 30, 2024, up from RMB 4,085.1 million at the end of 2023[7] - Non-current liabilities increased to RMB 801.995 million as of June 30, 2024, compared to RMB 698.570 million at the end of 2023[7] - The company's debt-to-asset ratio increased to approximately 23.2% as of June 30, 2024, compared to 17.5% as of December 31, 2023, mainly due to increased borrowings[85] Expenses - Administrative expenses increased to RMB 24,442,000 from RMB 13,915,000, indicating a rise in operational costs[16] - Interest expenses rose slightly to RMB 15,349,000 compared to RMB 14,310,000 in the previous year[16] - The company's income tax expense for the six months ended June 30, 2024, was RMB 39,292,000, compared to RMB 20,524,000 for the same period in 2023, representing an increase of 91.2%[21] - Research and development expenses for the six months ended June 30, 2024, amounted to RMB 34,138,000, up from RMB 24,381,000 in the same period in 2023, reflecting an increase of 40%[23] - Selling expenses rose by approximately 107.0% from about RMB 24.2 million in the first half of 2023 to about RMB 50.0 million in the first half of 2024[62] - Administrative and other operating expenses increased by approximately 63.9% from about RMB 65.4 million in the first half of 2023 to about RMB 107.2 million in the first half of 2024[63] - Financial costs increased by approximately 98.8% from about RMB 21.5 million in the first half of 2023 to about RMB 42.7 million in the first half of 2024[64] Corporate Actions and Investments - The company acquired 42.45% of CQV Co., Ltd., expanding its operations into South Korea, which is now recognized as a separate reporting segment[12] - The company has signed contracts for capital commitments amounting to RMB 684.841 million for property, plant, and equipment as of June 30, 2024[40] - The company issued a total of KRW 15 billion in non-listed unsecured convertible bonds with a 2% coupon rate, maturing on June 28, 2027[33] - On July 25, 2024, the company entered into an agreement to acquire the global surface solutions business for a total price of EUR 665 million (approximately RMB 5.187 billion)[41] - The company has a patent infringement lawsuit with a claim of approximately RMB 1.057 million, which is not expected to have a significant impact on its financial position[39] Strategic Focus and Development - The company is focusing on internationalization strategies and has achieved collaborative development with QVC in various areas, including product innovation and supply chain management[45] - The company aims to deepen its presence in the surface performance materials industry and explore international market promotion in 2024, focusing on high-quality development and creating a "growth + return" value-oriented enterprise[77] - The company is committed to promoting synergistic development among its business segments and subsidiaries, optimizing resource allocation and enhancing capabilities through accelerated business integration[79] - The company plans to establish a functional structure for its Asia-Pacific headquarters, focusing on centralized financial management, global currency settlement, leading R&D, global talent management, and marketing management[81] - The company is increasing its investment in R&D across five strategic directions: new materials, new products, new processes, new equipment, and new applications, while enhancing its intellectual property portfolio[82] Corporate Governance - The company is committed to high standards of corporate governance, ensuring shareholder interests and transparency, and has adopted the corporate governance code applicable for the first half of 2024[98] - The audit committee has reviewed the accounting principles and discussed risk management and internal controls, with the unaudited condensed consolidated financial statements for the first half of 2024 reviewed but not audited[97] - The board believes that the current balance of power and authority is not compromised, and the structure allows for swift and effective decision-making[98] - The company has adopted the standard code for securities transactions by directors and confirmed compliance for the first half of 2024[99] Employment and Workforce - As of June 30, 2024, the group employed 670 staff in mainland China, 10 in Hong Kong, and 179 in South Korea, reflecting an increase from 589, 9, and 171 respectively as of December 31, 2023[93] Risk Management - The group faces foreign currency risk primarily from transactions denominated in USD and JPY related to its South Korean operations, but management believes this risk is manageable and has not adversely affected operations or liquidity[94]

Investment Rating - The report upgrades the investment rating to "Buy" for the company [2][3]. Core Views - The company plans to acquire Merck's global surface solutions business for €665 million (approximately RMB 51.87 billion), which is expected to significantly expand its global business footprint and increase revenue and EBIT by nearly threefold and 1.6 times, respectively [2][3]. - The acquisition is anticipated to enhance cost efficiency through supply chain synergies and leverage Merck's advanced technology to expand the application of pearlescent materials, potentially replacing traditional organic and metallic pigments [3]. - The company has been executing a dual strategy of organic growth and external expansion, with recent acquisitions positioning it to become a leader in the global pearlescent pigment market [3]. Financial Summary - **Revenue Projections**: The company expects revenues of RMB 1,435 million in 2024, RMB 1,700 million in 2025, and RMB 1,934 million in 2026, reflecting year-on-year growth rates of 34.8%, 18.5%, and 13.8%, respectively [2][5]. - **Net Profit Projections**: The projected net profit for 2024 is RMB 210 million, increasing to RMB 267 million in 2025 and RMB 308 million in 2026, with growth rates of 15.8%, 26.8%, and 15.8% [2][5]. - **Profitability Metrics**: The gross margin is expected to remain stable at 49.7%, while the net margin is projected to be 18.5% in 2024, improving to 20.2% by 2026 [2][5][7]. - **Return on Equity (ROE)**: The ROE is forecasted to increase from 5.2% in 2023 to 7.7% by 2026 [2][5][7]. Market Data - As of August 6, 2024, the closing price of the company's stock is HKD 3.85, with a total share capital of 1.2 billion shares and net assets amounting to RMB 3.2 billion [1].