Core Viewpoint - The report highlights the financial performance of Kaisheng Technology for the year 2024, indicating a slight decline in revenue but significant improvement in net profit, driven by better margins in display materials and strategic partnerships [2][3]. Financial Performance - In 2024, Kaisheng Technology achieved revenue of 4.89 billion and net profit of 140 million, with a year-on-year change of -2.3% and +30.8% respectively, while the net profit excluding non-recurring items showed a loss narrowing to -20 million [2]. - The operating cash flow for 2024 was 140 million, reflecting an increase of 8.2% year-on-year [2]. Profitability Improvement - The company's gross margin improved to 17.0%, up by 3.7 percentage points year-on-year, primarily due to higher margins in the display materials segment [3]. - The final net profit margin reached 4.0%, an increase of 1.0 percentage points year-on-year [3]. Segment Performance - Display materials revenue grew to 3.52 billion, a year-on-year increase of 7.7%, while application materials revenue declined to 1.16 billion, down 26.6% [4]. - Sales of new display material products reached 25.47 million units, marking a 22.5% increase year-on-year, with the company becoming a key supplier for flexible cover glass in foldable smartphones [4]. Subsidiary Performance - Shenzhen Guoxian, holding 75.6% stake, reported revenue and net profit of 3.08 billion and 140 million respectively, with net profit margin improving to 4.4% [4]. - The subsidiary Bengbu Zhongheng experienced a revenue decline of 7.6% to 900 million and a net profit decrease of 11.7% to 80 million, with a net profit margin of 8.4% [5]. - Kaisheng Yingcai, holding 62.6% stake, saw revenue drop by 10.6% to 580 million and net profit decrease by 51.7% to 60 million, with a net profit margin of 10.5% [5].

Summary of the Conference Call for Shihua Technology Company Overview - **Company**: Shihua Technology - **Year**: 2024 - **Revenue**: 795 million - **Net Profit**: 280 million - **Dividend Distribution**: 1.136 billion, approximately 50% of net profit [3][4] Key Financial Performance - **Overall Revenue Growth**: 55% year-on-year, with a quarterly revenue increase of over 80% [3][5] - **Functional Electronic Materials Revenue**: 575 million, up 22% year-on-year, gross margin of 67% [3][5] - **High-Performance Optical Materials Revenue**: 218 million, up 440% year-on-year, gross margin of 24%-25% [3][5] - **Biobased Materials Sales**: Doubled to over 40 million, indicating strong market position [3][12] Market Dynamics - **Consumer Electronics Demand**: Remained high in Q3 and Q4, with significant order growth in Q4 due to increased customer stocking and positive market demand expectations [3][7] - **Geopolitical Risks**: Affected business operations, leading to a focus on long-term core projects [3][11] Product and Business Segment Insights - **High-Performance Optical Materials**: Includes materials for optical display modules, polarizers, OLED support films, and explosion-proof films, showing rapid growth [3][14] - **New Product Launches**: Expected to drive revenue growth in the second half of the year, with Q4 revenue reaching 70 million [3][15] - **Production Capacity Expansion**: Currently has 12 production lines, with ongoing projects to enhance production capabilities [3][6][19] Future Outlook - **Gross Margin Target for 2025**: Aiming for 30%-35% through product complexity and efficiency improvements [3][18] - **New Production Line**: Expected to be operational in two years, enhancing production capacity and competitiveness [3][19] - **Market Potential for Optical Materials**: Estimated market space of 10-20 billion, with significant growth opportunities [3][33] Strategic Initiatives - **Focus on High-Value Projects**: Emphasis on large projects with annual revenues exceeding 30 million, while small projects remain a core revenue component [3][27][28] - **Global Market Expansion**: Plans to optimize product structure and reduce supply chain risks by expanding into global markets [3][29] Customer and Market Structure - **Key Customers**: Include major players like Samsung, BOE, and Huaxing Optoelectronics, with varying transaction methods [3][34] - **Product Penetration**: Strong presence in new product categories, including heat dissipation materials and foldable screens [3][26] Conclusion Shihua Technology demonstrates robust financial growth and strategic positioning in the high-performance optical materials and functional electronic materials sectors. The company is focused on expanding production capacity, enhancing product offerings, and navigating geopolitical challenges while maintaining a strong commitment to shareholder returns.

基础化工 | 证券研究报告 — 行业周报 2025 年 3 月 3 日 化工行业周报 20250302 国际油价小幅下跌，磷酸一铵、氯化钾价格上涨 3 月份建议关注：1、三四月份旺季可能涨价的品种，如农化、纺织化学用品、制冷剂等；2、年 报季报行情，如大型能源央企、轻烃裂解子行业龙头公司等；3、下游行业快速发展，建议关注 部分电子材料、新能源材料公司；4、宏观经济整体预期改善，行业龙头价值公司进入长期可配 置区间。 行业动态 投资建议 截至 3 月 2 日，SW 基础化工市盈率（TTM 剔除负值）为 21.50 倍，处在历史（2002 年至今） 的 56.77%分位数；市净率（MRQ）为 1.81 倍，处在历史水平的 11.96%分位数。SW 石油石 化市盈率（TTM 剔除负值）为 10.29 倍，处在历史（2002 年至今）的 9.28%分位数；市净率 （MRQ）为 1.21 倍，处在历史水平的 2.77%分位数。3 月份建议关注：1、三四月份旺季可 能涨价的品种，如农化、纺织化学用品、制冷剂等；2、年报季报行情，如大型能源央企、 轻烃裂解子行业龙头公司等；3、下游行业快速发展，建议关注部分电子材料、新能源 ...