First(SH:603806) SINOLINK SECURITIES·2024-10-31 02:50Investment Rating - The report maintains a "Buy" rating for the company [2] Core Views - The company is experiencing temporary pressure on earnings, but its comprehensive advantages ensure that it can navigate through the cycle as a leading player in the film industry [2] - Despite a decline in revenue and net profit in Q3, the company continues to maintain positive profitability, highlighting its competitive edge in cost control and product structure [2][3] - The company has a strong cash flow management strategy, which has improved its operating cash flow, and it has successfully reversed credit impairment losses, contributing positively to its performance [3] Summary by Relevant Sections Earnings Overview - For the first three quarters of 2024, the company achieved revenue of 15.2 billion yuan, a year-on-year decrease of 9%, and a net profit attributable to shareholders of 1.258 billion yuan, down 12% year-on-year [2] - In Q3 alone, revenue was 4.4 billion yuan, reflecting a 27% year-on-year decline and a 19% quarter-on-quarter decline, with a net profit of 330 million yuan, down 40% year-on-year and 19% quarter-on-quarter [2] Operational Analysis - The decline in downstream production has pressured the profitability of the film products, with the sales gross margin decreasing by 5.2 percentage points to 12.82% in Q3. However, the company has managed to increase its market share despite the challenges faced by competitors [2][3] - The company’s diverse product offerings and excellent cost control allow it to provide competitive packaging solutions across various battery technologies, enhancing its profitability [3] Financial Forecast and Valuation - The profit forecasts for 2024-2026 have been adjusted to 1.74 billion, 2.5 billion, and 3.19 billion yuan respectively, with the current stock price corresponding to a PE ratio of 19 and 15 times for 2025-2026 [3] - The company is expected to benefit from the rapid development of its electronic materials business, reinforcing its competitive position in the market [3]