27/03/2020

Jacques Technology (002409) 2019 Interim Report Review: Growth in the First Half Increases Growth of Semiconductor Materials
The company’s semiconductor material business has achieved leapfrog development, LNG materials have been advanced in an orderly manner, and the future development space is broad. We maintain the company’s EPS forecast for 2019-2021 to 0.59/0.73/0.84 yuan / share, maintain target price of 23 yuan and “Buy” rating. Subsidiaries consolidated their revenues and increased their performance in the first half of the year.The company achieved revenue in the first half of 20198.6.1 billion, +32 a year.73%; net profit attributable to mothers1.00 重庆耍耍网 ppm, +136 a year.76%.Company Q2 achieved revenue 4.4.6 billion, +7 chain.21%; net profit attributable to mother is 0.5.9 billion, +43.90%. The company’s performance has improved significantly, and the combined period of Comet and Jiangsu Secco last year was 2 months, and the profitability of electronic specialty gases and semiconductor chemical materials has increased significantly due to the expansion of downstream demand. The flame retardant business entered adjustment, and the thermal insulation sheet and semiconductor materials continued to improve.In terms of business, (1) the flame retardant business was affected by the Xiangshui explosion and its performance declined. The net profits of Xiangshui Jacques and Binhai Jacques were -11.48 million yuan and -12.01 million yuan (1 in the same period last year).28 million yuan and -1.(88 million yuan); (2) The LNG thermal insulation board business continued to improve, and the company pushed forward sales orders of Yuhudong Zhonghua Shipbuilding (Group) Co., Ltd. as planned; (3) Huafei Electronics, a semiconductor material business, and Chengdu Kemet, Jiangsu Xianke maintained good profitability, net profit was 9 respectively.16 million yuan, 67.69 million yuan, 39.18 million yuan (13 in the same period last year.62 million yuan, 23.08 million yuan and 3.20 million yuan). The electronic materials industry is developing rapidly, and synergies enhance business strength.The company has strong synergies among various product lines in industries with the fastest growing potential in semiconductor specialty gases, semiconductor precursor materials, etc.Products such as UP CHEMICAL semiconductor precursors and shallow separation insulating materials (SOD) affiliated to Jiangsu Scitech have internationally leading technologies. The products have been used by internationally renowned semiconductor manufacturers such as SK HYNIX for many years and are widely used in 16nm, 21nm, 25nmThe manufacturing technology of DRAM and advanced 3DNAND Flash in high-end processes is internationally leading. Risk factors: fluctuations in raw material prices; business development is less than expected; technology research and development is less than expected; environmental protection emergencies. Investment suggestion: The company’s semiconductor material business will achieve leapfrog development, and the LNG material business will advance in an orderly manner. Although the flame retardant business is affected, the overall future development space is still broad. We maintain the company’s EPS forecast for 2019-2021 to be 0.59/0.73/0.84 yuan / share, maintain target price of 23 yuan (corresponding to 39 times PE in 2019) and “Buy” rating.