STL(SZ:002648) HTSC·2024-07-18 02:12Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 20.28 [6][7]. Core Insights - The company reported a net profit of RMB 2.06 billion for H1 2024, reflecting a year-on-year increase of 12.5%, despite a revenue decline of 4.6% to RMB 19.4 billion [1]. - The report anticipates net profits of RMB 5.7 billion, RMB 6.2 billion, and RMB 7.6 billion for the years 2024, 2025, and 2026 respectively, with corresponding EPS of RMB 1.69, RMB 1.83, and RMB 2.25 [1]. - The overall gross margin improved by 3.6 percentage points to 21.1% in H1 2024, driven by a slight recovery in product prices and lower raw material costs [2][3]. Financial Performance - For H1 2024, the company achieved revenue of RMB 19.4 billion, with a net profit of RMB 2.06 billion, and a non-recurring profit of RMB 2.23 billion, marking a 12.5% increase year-on-year [1]. - The second quarter of 2024 saw a net profit of RMB 1.03 billion, which is an 8.5% decrease year-on-year but a 1% increase quarter-on-quarter [1]. - The report projects revenue growth for the upcoming years, with expected revenues of RMB 44.1 billion in 2024, RMB 45.3 billion in 2025, and RMB 48.1 billion in 2026 [5]. Product and Market Analysis - The revenue from functional chemicals, polymer materials, and new energy materials for H1 2024 was RMB 9.2 billion, RMB 5.5 billion, and RMB 360 million respectively, with year-on-year changes of -13%, -2%, and +217% [2]. - The average prices for key products such as acrylic acid and butyl ester showed mixed trends, with acrylic acid down by 7.5% and butyl ester up by 0.4% year-on-year [2]. - The company is focusing on high-end new materials, with significant investments in projects such as the 800,000-ton multi-carbon alcohol project and a high-end polymer materials industrial park [4]. Valuation Metrics - The report assigns a 12x PE ratio based on comparable companies' average expectations for 2024, leading to a target price of RMB 20.28 [1][6]. - The company's market capitalization is approximately RMB 60.3 billion, with a closing price of RMB 17.91 as of July 17 [7]. Future Outlook - The report suggests that product market conditions are expected to gradually improve, supported by seasonal demand in Q3 and optimized industry supply [3]. - The company’s ethylene unit has completed maintenance, which is anticipated to enhance production and profitability in the upcoming quarters [3].