SXXC(SZ:002585)2025-08-31 16:21Summary of the Conference Call for 双星新材 (Double Star New Materials) Company Overview - Company Name: 江苏双星彩塑新材料股份有限公司 (Double Star New Materials) - Industry: Special Chemicals, specifically focusing on polyester films (BOPET) for packaging, printing, and functional films for electronics and new energy sectors [doc id='10'][doc id='8']. Key Financial Performance - Q2 2025 Performance: - Revenue: 2Q revenue was 2.626 billion RMB, down 7% year-on-year [doc id='1']. - Net Loss: The company reported a net loss of 1.49 billion RMB, which was at the lower end of the forecast [doc id='1']. - Sequential Decline: 2Q revenue decreased by 10% quarter-on-quarter, with net loss expanding to 1.07 billion RMB, more than doubling from Q1 [doc id='1']. - Margins: 2Q gross margin was -1.5% and net margin was -8.6%, compared to +3.9% and -3.1% in Q1 respectively [doc id='1']. Revenue Breakdown - Optical Films: Revenue from optical films was 1.183 billion RMB, accounting for 45% of total revenue, down 8% year-on-year with a gross margin of 5% [doc id='8']. - New Energy Films: Revenue contribution from new energy films dropped 98%, falling from 8% in Q1 to nearly zero, attributed to capacity shifts to other products [doc id='8']. - BOPET Films: Revenue from BOPET films increased by 10%, but gross margin was -13% [doc id='8']. Industry Context - Capacity Issues: The industry continues to face overcapacity, with domestic BOPET capacity growing by 3.5% year-on-year in H1 2025, although the growth rate is slowing [doc id='8']. - Utilization Rates: Industry capacity utilization is projected to decline from 74% in 2022 to 65.6% in H1 2025 [doc id='8']. Future Outlook - Guidance: The company did not provide specific guidance for future performance [doc id='3']. - Valuation: The stock maintains a "Buy" rating with a target price of 7.30 RMB, corresponding to a 19x PE for 2026E and 0.7x PB [doc id='3']. Analyst Insights - Risks: Potential risks include slower-than-expected ramp-up of production capacity, increased competition in optical films and photovoltaic backsheet films, and weaker-than-expected demand in related industries [doc id='11']. - Market Sentiment: Analysts rated the industry structure as stable (score of 3) and indicated no significant changes in regulatory or government environments [doc id='13']. Important Metrics - Market Capitalization: 6.51 billion RMB (approximately 0.91 billion USD) [doc id='4']. - Stock Performance: The stock price as of August 27, 2025, was 5.67 RMB, with a 52-week price range of 6.46-4.19 RMB [doc id='4']. Conclusion The financial performance of 双星新材 indicates significant challenges, particularly with increasing losses and declining margins amidst an overcapacity situation in the industry. The outlook remains cautious, with analysts maintaining a "Buy" rating based on future potential despite current struggles.