HHCK(688535) 国海证券·2024-10-28 15:00Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [2][7]. Core Insights - The company has shown steady revenue growth in the third quarter, benefiting from domestic substitution trends. In the first three quarters of 2024, the company achieved operating revenue of 240 million yuan, a year-on-year increase of 17.33%, and a net profit attributable to the parent company of 35 million yuan, up 48.08% year-on-year [2][3][4]. - The report highlights that despite the revenue growth, the company's profit margins were impacted by rising raw material costs and increased operating expenses, leading to a decline in net profit for the third quarter compared to the previous year [3][6]. Summary by Sections Financial Performance - For Q3 2024, the company reported operating revenue of 84 million yuan, a year-on-year increase of 8.11% and a quarter-on-quarter increase of 1.70%. However, the net profit attributable to the parent company was 10 million yuan, reflecting a year-on-year decrease of 12.75% and a quarter-on-quarter decrease of 17.33% [3]. - The gross profit margin for Q3 2024 was 26.74%, down 1.43 percentage points year-on-year and 0.20 percentage points quarter-on-quarter. The net profit margin was 11.84%, down 2.89 percentage points year-on-year and 2.78 percentage points quarter-on-quarter [3]. Market Position and Trends - The company is positioned to benefit from the domestic substitution in the epoxy encapsulation materials market, which had a market size of 6.624 billion yuan in 2021. The report indicates that the company is expanding its market share in traditional packaging while actively entering the advanced packaging sector [4][6]. - The advanced packaging market is expected to grow rapidly, and the company is focusing on high-end product industrialization, with its 700 series products for QFN already in small-scale production [6]. Earnings Forecast - The report forecasts the company's operating revenue for 2024, 2025, and 2026 to be 339 million yuan, 443 million yuan, and 554 million yuan, respectively, with corresponding net profits of 47 million yuan, 63 million yuan, and 81 million yuan. The projected P/E ratios for these years are 126, 94, and 74 times [7][8].