Core Viewpoint - Juhe Materials (SH:688503) is planning to issue H-shares and list on the Hong Kong Stock Exchange to raise funds for its transformation into the semiconductor sector while facing challenges in its current photovoltaic silver paste business [1][2][17]. Group 1: Company Overview - Juhe Materials was established in 2015 and has quickly become the global leader in front silver paste, achieving a market share of 34.40% by 2023 [3][8]. - The company has faced a "growth without profit" dilemma, with revenue reaching 103 billion CNY in 2023 but a decline in net profit [9][10]. Group 2: Business Transformation - The company is shifting towards the semiconductor industry, specifically targeting the high-tech blank mask substrate market, which is currently dominated by Japanese suppliers [1][10][13]. - Juhe Materials plans to acquire SK Enpulse's blank mask business for approximately 3.5 billion CNY, indicating a strategic move to enhance its capabilities in the semiconductor sector [10][11][13]. Group 3: Financial Performance - In 2024, revenue is projected to reach 124.88 billion CNY, a 21% increase year-on-year, but net profit is expected to decline by 5.45% to 4.18 billion CNY [9][10]. - The company has seen a significant increase in debt, with total liabilities reaching 6.984 billion CNY, and a debt-to-asset ratio of 59.07% [15][16]. Group 4: Market Challenges - The photovoltaic silver paste industry is experiencing intense competition and price declines, impacting profit margins [9][10]. - Rising raw material costs, particularly silver, have further squeezed profit margins, with silver prices increasing by nearly 65% in 2023 [9][10]. Group 5: Future Outlook - The company aims to leverage the Hong Kong listing to secure funding for its strategic transformation and to address financial pressures from its current operations [15][17]. - The semiconductor blank mask market is projected to have a market space of approximately 4-5 billion CNY in 2024-2025, indicating potential growth opportunities for Juhe Materials [14][17].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company maintains a high market share in silver paste, with an estimated market share of approximately 35% [9] - The company is expanding into the semiconductor sector through the acquisition of SKE's blank mask business, which is expected to enhance growth opportunities [9] - Despite challenges such as pressure on gross margins and increased competition, the company shows resilience in profitability and operational cash flow [9] Financial Performance Summary - Total revenue for 2023 is projected at 10,290 million yuan, with a year-on-year growth of 58.21% [1] - The net profit attributable to shareholders for 2023 is estimated at 442.08 million yuan, reflecting a year-on-year increase of 13% [1] - The earnings per share (EPS) for 2023 is expected to be 1.83 yuan, with a price-to-earnings (P/E) ratio of 35.75 [1] Revenue and Profit Forecast - Revenue is forecasted to grow to 12,488 million yuan in 2024, and 14,080 million yuan in 2025, with growth rates of 21.35% and 12.75% respectively [1] - The net profit is expected to decline to 418.01 million yuan in 2024 and further to 353.03 million yuan in 2025, indicating a decrease of 5.45% and 15.54% year-on-year [1] - The company anticipates a rebound in net profit to 502.73 million yuan in 2026 and 648.28 million yuan in 2027, with growth rates of 42.40% and 28.95% respectively [1] Market Position and Strategy - The company has reported a significant increase in silver paste shipments, with Q3 2025 shipments reaching approximately 520 tons, a year-on-year increase of 16% [9] - The acquisition of SKE is aimed at leveraging the low domestic supply of blank masks, which are critical for semiconductor manufacturing [9] - The company plans to optimize expenses and improve operational cash flow, with a focus on maintaining a strong market position [9]