Yongguan New Material(SH:603681)2024-05-08 01:00Investment Rating - The report maintains an "Outperform" rating for the company with a target price of 29.26, based on previous ratings of 25.71 and 23.51 [11][30]. Core Insights - In Q1 2024, the company reported a recurring net profit growth of 142.37% quarter-over-quarter and reversed the loss year-over-year, achieving an operating income of 1.319 billion yuan, which is a decline of 7.35% quarter-over-quarter but an increase of 11.90% year-over-year [31]. - The company's profit growth is attributed to an improved macro-environment, the digestion of released production capacity, and significant increases in government grants year-over-year [31][32]. - The company is focusing on environmental protection and specialty adhesive tapes to achieve domestic substitution, with ongoing projects expected to enhance growth momentum [32]. Summary by Sections Financial Performance - The company achieved a net profit of 51.24 million yuan in Q1 2024, marking a growth of 51.23% year-over-year and reversing previous losses [31]. - Recurring net profit reached 34.11 million yuan, up 142.37% quarter-over-quarter [31]. Strategic Initiatives - The company is investing in environmentally friendly biodegradable materials and automotive functional adhesive films, with significant projects expected to complete by the end of 2024 [32]. Market Position - The report indicates that the company is well-positioned to benefit from domestic substitution trends in the industrial adhesive tape sector, leveraging its R&D strengths and customer resources [32].