Red Avenue New Materials(SH:603650) Minsheng Securities·2024-04-30 13:30Investment Rating - The report maintains a "Recommended" rating for Tongcheng New Materials (603650.SH) with a current price of 29.35 CNY [1]. Core Views - The recovery of the tire business is expected, and electronic materials are steadily advancing [1]. - The company achieved significant growth in Q1 2024, with revenue of 782 million CNY, a year-on-year increase of 17.57%, and a net profit attributable to shareholders of 144 million CNY, up 74.29% year-on-year [10]. - The company is a leader in semiconductor photoresists, and its product series is expected to gradually ramp up production [10]. - The company is actively developing biodegradable materials and enhancing its product brand strength [10]. Summary by Sections Financial Performance - In Q1 2024, the special rubber additive business generated 597 million CNY, and the electronic chemicals business contributed 156 million CNY, exceeding market expectations [10]. - The company forecasts net profits attributable to shareholders of 516 million CNY in 2024, 615 million CNY in 2025, and 761 million CNY in 2026, with corresponding PE ratios of 34, 29, and 23 [10][19]. Business Development - The company has completed the development of several models of ArF photoresists, which are now in mass production and expected to ramp up in Q2 2024 [10]. - Subsidiary Beixu Electronics is the first domestic manufacturer of positive photoresists for array applications, with a production capacity of 8,000 tons per year [10]. - The company is advancing its biodegradable materials business, developing products for various applications, including agricultural films and food packaging [10]. Market Position - The company is positioned as a leader in the domestic photoresist industry, with a strong technical reserve and ongoing development of new customers [10]. - The report highlights the company's competitive advantage in stable supply and technology leadership in the domestic market [10].