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].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 5.4, indicating a potential upside of 33% from the current price of HKD 4.03 [3][4]. Core Insights - The company has signed an agreement to acquire Merck's global surface solutions business for EUR 660 million (approximately RMB 5.2 billion), which is seen as a significant milestone for future growth [1]. - The acquisition is expected to enhance the company's market share, particularly in high-end applications such as automotive and cosmetics, where Merck holds a 22% global market share in pearlescent pigments [1]. - The report projects net profits for the years 2024, 2025, and 2026 to be RMB 310 million, RMB 400 million, and RMB 510 million, respectively, with corresponding EPS of HKD 0.25, HKD 0.32, and HKD 0.40 [1][7]. Summary by Sections Acquisition Details - The acquisition of Merck's surface solutions business is expected to significantly increase the company's market share and enhance its competitive edge in high-end markets [1]. - The transaction is valued at EUR 660 million, with an EV/EBITDA multiple of 10.6x, which is considered reasonable compared to industry averages [1][8]. Financial Projections - Revenue projections for the company are as follows: RMB 1.06 billion in 2023, RMB 1.53 billion in 2024, RMB 1.76 billion in 2025, and RMB 2.02 billion in 2026, reflecting a growth rate of 16.06% in 2024 and 15.10% in 2025 [2][7]. - The company expects to maintain a gross margin around 49% to 51% over the forecast period [2][7]. Valuation Analysis - The report employs both comparable company analysis and DCF methods for valuation, concluding a target price of HKD 5.4 based on a PE multiple of 22x and a WACC of 7.4% [8][10]. - The DCF analysis estimates the company's market value at HKD 59 billion, supporting the target price of HKD 5.4 [8][10].

Investment Rating - The report maintains an "Outperform" rating for Global New Material International Holdings (6616 HK) with an expected relative benchmark increase of over 10% in the next 12-18 months [3][41]. Core Insights - The company intends to acquire Merck's global surface solutions business for 665 million euros, with the transaction expected to enhance its market coverage, product system, and technological capabilities [1][3]. - The acquisition is based on a valuation of 10.6x the target company's pre-tax profit of 62.7 million euros for the year ending December 31, 2023 [1][3]. - The company has achieved significant results in collaborative integration with CQV, becoming its largest shareholder with a 42.45% stake, which is expected to enhance product synergy and market expansion [1][3]. - The second phase of the pearl material factory has commenced production, with a designed annual capacity of 30,000 tons, focusing on high-end applications [2][3]. - The company invested 75 million RMB in R&D in the fiscal year 2023, representing 7.1% of its operating revenue, and has made advancements in new energy projects in collaboration with Zhejiang University [1][3]. Summary by Sections Acquisition Details - The company announced the acquisition of Merck's global surface solutions business for 665 million euros, with the target company generating 405 million euros in revenue and 62.7 million euros in pre-tax profit for 2023 [1][3]. Collaborative Integration - The integration with CQV has led to improved product collaboration, sales channel synergy, and enhanced R&D capabilities, positioning the company as a leader in the global pearlescent pigment market [1][3]. Production Capacity - The second phase of the pearl material factory is operational, designed to produce high-end automotive and cosmetic-grade materials, utilizing advanced intelligent production systems [2][3]. Research and Development - The company has increased its R&D investment, resulting in new patents and breakthroughs in energy-related projects, contributing to its growth strategy [1][3].

Business Performance - The company achieved a significant milestone in the fiscal year 2023, becoming one of the top three global players in the pearlescent pigment industry by sales volume[5]. - In fiscal year 2023, the company focused on expanding production capacity for pearlescent materials and enhancing R&D capabilities, leading to steady business growth[5]. - The company reported a strong performance in high-end pearlescent materials, synthetic mica, and new energy materials, continuously creating new market opportunities[5]. - In the fiscal year 2023, the company's revenue was approximately RMB 1,064.1 million, an increase of about 16.1% year-on-year[9]. - The net profit for the fiscal year 2023 was approximately RMB 213.3 million, a decrease of about 9.8% compared to RMB 236.5 million in the fiscal year 2022[9]. - The EBITDA for the fiscal year 2023 was approximately RMB 369.6 million, an increase of about 13.9% from RMB 324.4 million in the fiscal year 2022[9]. - Total revenue increased from approximately RMB 916.8 million in the fiscal year 2022 to approximately RMB 1,064.1 million in the fiscal year 2023, representing a year-on-year growth of about 16.1%[18]. - Total sales for the year 2023 reached approximately RMB 1,064.1 million, an increase of about 16.1% compared to RMB 916.8 million in 2022[22]. - Sales of pearlescent pigment products increased from approximately RMB 850.7 million in 2022 to about RMB 964.0 million in 2023, representing a growth of approximately RMB 113.3 million or 13.3%[24]. - Sales of mica functional fillers rose from approximately RMB 644 million in 2022 to about RMB 838 million in 2023, an increase of approximately RMB 19.4 million or 30.2%[25]. Strategic Initiatives - The acquisition of CQV Co., Ltd. in August 2023 marked an important step towards global expansion, integrating operations across products, sales channels, R&D, production, and procurement[6]. - The company has adopted a strategy of "internal development and external expansion," focusing on core business areas and strategic layout[5]. - The internationalization process of the company is accelerating, expanding its collaborative network significantly[6]. - The company aims to achieve its internationalization and group operation goals in 2024, marking a critical year for its strategic development[8]. - The company successfully integrated CQV into its operations post-acquisition, focusing on technology, product, sales channels, and supply chain synergies[15]. - The company aims to strengthen its position as a leading player in the global pearlescent pigment market through enhanced R&D capabilities and market expansion strategies[15]. Research and Development - The company launched 100+ new high-end pearlescent materials in fiscal year 2023, enhancing user experience and value[9]. - Research and development expenses amounted to RMB 75.0 million, representing approximately 7.1% of revenue, with a year-on-year increase of about 4.3%[12]. - The company obtained 16 new patents and applied for 3 additional patents in fiscal year 2023, enhancing its intellectual property portfolio[12]. - The R&D department will focus on three key areas: pearlescent pigments, synthetic mica functional fillers, and new energy battery materials[49]. - The company will increase its investment in R&D and enhance collaboration with universities and research institutions[49]. Financial Position - The company has maintained a high-quality development trend, driven by market-oriented strategies and customer-centric approaches[5]. - The gross profit for the year 2023 was approximately RMB 528.3 million, up about 16.0% from RMB 455.3 million in 2022, maintaining a gross margin of approximately 49.7%[28]. - Financing costs surged by approximately 369.6%, increasing from about RMB 11.0 million in 2022 to approximately RMB 51.4 million in 2023, primarily due to increased interest expenses on bank loans and bonds[33]. - Other income and gains for 2023 amounted to approximately RMB 28.0 million, up from RMB 18.3 million in 2022, mainly due to foreign exchange gains recorded in 2023[29]. - Administrative and other operating expenses increased by approximately 47.3%, rising from about RMB 128.0 million in 2022 to approximately RMB 188.6 million in 2023, largely due to costs associated with the acquisition of CQV[32]. - As of December 31, 2023, the company's cash and bank balances were approximately RMB 3,203.5 million, up from RMB 1,882.7 million on December 31, 2022[57]. - The company's total liabilities to equity ratio increased to approximately 26.2% as of December 31, 2023, compared to 24.1% on December 31, 2022, primarily due to increased bank loans and the issuance of initial bonds[58]. - The company's net assets were approximately RMB 4,085.1 million as of December 31, 2023, compared to RMB 2,543.3 million on December 31, 2022, with net asset value per share increasing to approximately RMB 2.55 from RMB 1.98[59]. Corporate Governance - The board is committed to maintaining high standards of corporate governance to protect shareholder interests and enhance corporate value[112]. - The company has adopted the principles and code provisions of the Corporate Governance Code as the basis for its corporate governance practices[112]. - The board consists of a balanced mix of executive and non-executive directors, ensuring strong independence and effective decision-making[115]. - The company has established a corporate culture based on four core values: integrity, innovation, leadership, and harmony[109]. - The board has confirmed that it has complied with the standards of the Securities Trading Code throughout the fiscal year 2023[113]. - The company has established three board committees: Audit Committee, Remuneration Committee, and Nomination Committee, each with specific written terms of reference[126]. - The Audit Committee held three meetings to review the financial performance and reports for the fiscal year 2023, focusing on risk management and internal control effectiveness[127]. - The company has established a shareholder communication policy to promote effective communication with shareholders and encourage active participation in company affairs[151]. Environmental, Social, and Governance (ESG) - The company has actively contributed to sustainable development, with its chairman being selected as one of the "30 ESG Entrepreneurs in the Greater Bay Area" for 2023[5]. - The company emphasizes the importance of effective governance structures for integrating and managing sustainable development within its business[159]. - The board is responsible for overseeing the company's ESG strategies, policies, and performance, regularly analyzing risks and opportunities[159]. - The company achieved a reduction in air pollutant emissions density by 10% per production unit, targeting a 20% reduction in hazardous and non-hazardous waste density, and a 30% reduction in water consumption density by 2027, based on 2021 levels[181]. - The company has established an Environmental, Social, and Governance (ESG) committee to identify environmental risks and opportunities, setting clear environmental goals[182]. - The company has received a gold rating from EcoVadis for its sustainability efforts, evaluated across 21 criteria in four main themes: environment, fair labor and human rights, ethics, and sustainable procurement[181]. - The group has identified 28 significant environmental, social, and governance (ESG) issues, categorized into four areas: environment, employment and labor practices, operational practices, and community[173]. - The ESG report follows the guidelines set out in the Securities Listing Rules and is based on four reporting principles: materiality, quantification, balance, and consistency[161]. Risks and Challenges - The company faces significant risks related to reliance on the Chinese and global economies, with potential adverse impacts from any major economic downturns[88]. - Demand and supply levels for pearlescent pigments and synthetic mica powder are influenced by macroeconomic factors and production capacities of other manufacturers, which are beyond the company's control[88]. - The company's financial performance is dependent on effective inventory management, which is susceptible to changes in overall customer demand and consumer preferences[88]. - The company has confirmed that there are no significant uncertainties that may cast doubt on its ability to continue as a going concern[143].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 4.9, indicating a potential upside of 33% from the current price of HKD 3.68 [4][2][8]. Core Insights - The company reported a revenue of RMB 1.06 billion in 2023, representing a year-on-year growth of 16%. However, the net profit attributable to shareholders decreased by 18.9% to RMB 180 million due to increased administrative and financial expenses [1][2]. - The company has adjusted its net profit forecasts for 2024, 2025, and 2026 to RMB 310 million, RMB 400 million, and RMB 510 million, respectively, with corresponding EPS of HKD 0.25, HKD 0.32, and HKD 0.40 [1][2]. - The new production capacity from the second-phase factory, which commenced operations in February 2024, is expected to enhance market supply, particularly for high-end products [1][2]. Revenue Performance - In 2023, the company achieved a revenue of RMB 1.06 billion, with a comparable growth rate of 13% after excluding the impact of the CQV acquisition [1][2]. - The sales volume of pearlescent pigments reached 18,700 tons, a 4% increase year-on-year, with an average selling price of RMB 52,000 per ton, up 8.9% [1][2]. Cost and Profitability - The administrative expenses rose by 47% to RMB 188 million, while financial expenses increased by RMB 40 million to RMB 51 million, primarily due to the acquisition of CQV and the establishment of a new M&A team [1][2]. - The gross profit margin for 2023 was approximately 49.7%, with a net profit margin of 20% [3][14]. Future Growth Prospects - The company anticipates rapid growth in its Korean operations following the acquisition of CQV, which has alleviated raw material supply constraints and reduced costs [2][1]. - The second-phase factory is expected to contribute an additional 6,000 tons of pearlescent pigment production in 2024, enhancing the company's ability to meet market demand [1][2]. Valuation Analysis - The report employs both comparable company analysis and DCF methods for valuation, assigning a PE multiple of 20x based on expected high growth and market conditions [8][10]. - The estimated market value of the company is projected to be HKD 5.0 billion, corresponding to a target price of HKD 4.9, reflecting a 33% upside potential [8][10].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完 整性亦不發表任何聲明，並明確表示概不就因本公告全部或任何部分內容而產生或因依賴該等內容 而引致的任何損失承擔任何責任。 GLOBAL NEW MATERIAL INTERNATIONAL HOLDINGS LIMITED 環球新材國際控股有限公司 （於開曼群島註冊成立的有限公司） （股份代號：06616） 截至二零二三年十二月三十一日止年度 全年業績 | --- | --- | |-------|----------------------------------------------------------------------------------------------------------------------------------------------| | | | | | 董事會欣然宣佈本集團二零二三年財政年度的全年業績如下： | | － | 收益為約人民幣 1,064.1 百萬元，較二零二二年財政年度的約人民幣 916.8 百 | | | 萬元增加約 16.1% 。 | | － | 毛利為約人民 ...