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].
环球新材国际：上半年增长强劲，全球能力扩张