Investment Rating - The industry investment rating is "Outperform the Market" (maintained) [2] Core Viewpoints - The report highlights the recovery in demand for photoinitiators driven by the continuous growth in the downstream PCB industry, with various grades of photoinitiators seeing price increases [5] - The global PCB market is expected to recover, with a projected total output value of USD 73.57 billion in 2024, reflecting a year-on-year growth of 5.8% [5] - The concentration of production capacity in the photoinitiator industry is increasing, leading to a more favorable supply-side environment for leading companies [5] Summary by Relevant Sections Market Performance - The report indicates a significant price increase for various grades of photoinitiators, with the 907 grade price at CNY 88/kg, up 19% year-to-date [5] Demand Side - The demand for photoinitiators is driven by their critical role in photopolymerization systems, with applications in various sectors including electronics, coatings, and healthcare [5] - The global PCB market value was USD 81.74 billion in 2022, declining to USD 69.52 billion in 2023, but is expected to rebound in 2024 [5] Supply Side - China is the world's largest producer and exporter of photoinitiators, with a significant portion of global production capacity concentrated in leading firms [5] - The report notes that leading companies are expanding their production capacities, while weaker firms may face elimination as industry concentration increases [5] Recommendations - The report suggests focusing on companies such as Jiu Ri New Materials, Yangfan New Materials, and Strongly New Materials as potential investment opportunities [5]

Core Viewpoint - The credit rating report indicates that Changzhou Strongly Electronic New Materials Co., Ltd. (hereinafter referred to as "Strongly New Materials") maintains a stable credit rating of AA- due to its leading position in the electronic chemical products sector, despite facing challenges from insufficient downstream demand and increased competition [3][5][12]. Company Overview - Strongly New Materials is recognized as a key high-tech enterprise under the National Torch Program, specializing in electronic chemical products for photolithography, with a significant market share in PCB dry film photoinitiators [5][12]. - The company has a diverse production layout across multiple locations, including Changzhou, Shaoxing, Taixing, and Changsha, and offers a wide range of products in the PCB, LCD, and semiconductor sectors [5][12]. Financial Performance - In 2024, the company reported a net loss of 180 million yuan, attributed to increased asset impairment losses and rising operational expenses, which significantly eroded profits [5][6][20]. - The total assets as of March 2025 were 34.25 billion yuan, with total liabilities at 11.94 billion yuan, indicating a stable capital structure despite the operational challenges [3][20]. Market Conditions - The demand for photoinitiators and electronic chemical products is currently under pressure due to a sluggish real estate market and intensified competition, leading to a decline in product prices [9][10][12]. - The PCB market is showing signs of recovery, with a projected increase in production value, which may provide some support for the demand for photolithography chemicals [10][12]. Production Capacity and Utilization - The company has significantly increased its production capacity due to the completion of major projects funded by the Strongly Convertible Bonds, but faces challenges in capacity utilization due to weak downstream demand [5][16][18]. - The capacity utilization rate for electronic materials has declined, indicating a substantial pressure on the company to digest its increased production capacity [5][16][18]. Research and Development - Strongly New Materials continues to invest in R&D, with a focus on developing new products and enhancing existing technologies, although the R&D expenditure as a percentage of revenue has decreased [12][13]. - The company is actively working on several projects, including advanced packaging materials for semiconductors, which are currently in the customer validation phase [12][13]. Customer Base and Market Position - The company maintains stable relationships with major global photolithography manufacturers, which helps secure its market position despite competitive pressures [12][14]. - In 2024, the top five customers accounted for 24.28% of total sales, reflecting a relatively low customer concentration and stable partnerships [12][14].

Group 1: Advanced Packaging Materials Development - The company is developing photosensitive polyimide (PSPI) for advanced semiconductor packaging, with high-temperature and low-temperature curing variants [1][4] - PSPI products are currently in the customer sample verification stage, while advanced plating materials are in the customer certification phase [2][5] - The company aims to expedite customer certification processes to generate actual benefits [2][4] Group 2: Financial Performance and Challenges - In 2024, the company achieved revenue of 924.09 million yuan, a 15.93% increase year-on-year [3] - The company reported losses due to low market prices and increased financial costs, including a total of 123.57 million yuan in impairment provisions [3] - The company plans to optimize financial management and reduce costs through various measures [3] Group 3: Cost Reduction and Profitability Improvement - Cost reduction strategies include bulk purchasing, optimizing production technology, and improving personnel structure [2][3] - The company will enhance cash flow management by optimizing accounts receivable and improving inventory turnover [2][3] Group 4: Future Business Strategies - The company will focus on core business areas while exploring new markets and products [3][4] - Plans include strengthening marketing efforts, enhancing R&D investment, and improving production safety and efficiency [3][4] - The company is transitioning from a single supplier of photoresist to a comprehensive service provider in the photoresist sector [4]