Haitong: Benefiting from the recovery of downstream demand, the rapid development of high-end new materials

Haitong releases research report stating that globally, the semiconductor industry is expected to see a moderate recovery in the first half of 2024. Strong demand from data centers and artificial intelligence is driving rapid growth in the AI server and storage chip markets. At the same time, demand for consumer electronics such as smartphones and computers is picking up, leading to a global growth cycle in the integrated circuit industry. OLED materials are benefiting from the warming demand for consumer electronics and continued penetration rate increase, while the LCD materials business is gradually recovering. The PCB industry is also experiencing growth, with high-frequency materials gradually replacing imports, while the carbon fiber market faces intensifying competition and declining revenues and profits for companies. Semiconductor materials are benefiting from increased downstream demand and accelerated import substitution, with overall revenue and profits seeing positive growth. In the first half of 2024, average year-on-year revenue growth for companies was 15.94%, and average net profit growth for shareholders was 15.65%. In the global semiconductor industry, data centers and artificial intelligence are driving rapid growth in AI server and storage chips, and consumer electronics demand is recovering, leading to a return to a growth cycle in the global integrated circuit industry. In China, the semiconductor market is gradually recovering in the first half of 2024, with industry inventory gradually decreasing and major wafer manufacturers steadily increasing their capacity. OLED materials are benefiting from increased demand for consumer electronics and continued penetration rate increase, while the LCD materials business is gradually recovering. In the first half of 2024, average year-on-year revenue growth for companies was 12.12%, while average net profit growth for shareholders was -83.26%. As the application of OLED in downstream sectors continues to expand and market size increases, domestic panel manufacturers are actively expanding production of 8.6-generation high-generation OLED production lines. OLED organic materials, as a key upstream segment of the industry chain, are experiencing rapid growth in performance in the first half of 2024 due to domestic alternatives and growing market demand. The PCB industry is also experiencing growth, with high-frequency materials gradually replacing imports. According to Shengyi Technology's half-year report for 2024, global PCB output in the first quarter of 2024 remained stable compared to the previous year, marking a turning point for the industry. It is expected to grow by 4.6% in the second quarter. In the first half of 2024, average year-on-year revenue growth for companies was 9.76%, and average net profit growth for shareholders was -73.57%. The carbon fiber market is facing increased competition, leading to declining revenues and profits for companies. As of June 30th, the market price for carbon fiber was 91.25 yuan/kg, a decrease of nearly 3.5 yuan/kg from the beginning of the year. In the first half of 2024, the market average price was 94.37 yuan/kg. In the same period, average year-on-year revenue growth for companies was -15.66%, while average net profit growth for shareholders was -48.33%. Investment recommendations. Haitong believes that as downstream demand gradually recovers and the high-end application market rapidly develops, leading domestic companies are expected to benefit from import substitution. They recommend paying attention to new materials companies such as Novoray Corporation (688300.SH), Jiangsu Yoke Technology (002409.SZ), Guangdong Huate Gas Co., Ltd (688268.SH), Shandong Sinocera Functional Material (300285.SZ), Shenzhen Capchem Technology (300037.SZ), and Suzhou Jinhong Gas Co., Ltd. (688106.SH). Risk warning. Downstream application development may not meet expectations, and industry competition may intensify.