Performance summary: in the first half of 2022, the company realized operating income of 482 million yuan (+ 51.3%), realized net profit of 51.3 million yuan (+ 192%), corresponding basic EPS of 0.28 yuan, and deducted non-return net profit of 36.07 million yuan (+ 830%). The company's Q2 achieved revenue of 287 million yuan (year-on-year + 54.6%, month-on-month + 47.2%), net profit of 35.35 million yuan (year-on-year + 103%, month-on-month + 119%), and EPS of 0.19 yuan per quarter.

With the rapid growth of superalloy business and the rapid improvement of profitability: the company's main business includes three types of products: alloy pipe, superalloy and nickel-based corrosion-resistant alloy. In recent years, the company's business is in the adjustment stage. Gradually from the original main business copper-based alloy pipes to higher value-added superalloy products. The substantial increase in the revenue scale of 2022H1 is mainly due to the high demand in the downstream "two machines" field and the prosperous production and sales of the company's superalloy products, of which the revenue of high temperature corrosion resistant alloy is 277 million yuan (+ 124%) and the proportion of revenue structure is 57.5% (year-on-year + 18.7pcts). In terms of profitability, 22H1's sales gross profit margin reached 21.2% (year-on-year + 2.0lpcts). The improvement in profitability was mainly due to the high-end product structure, with a net profit rate of 10.7% (year-on-year + 4.77pcts). The increase was mainly due to the decline in management expenses and R & D expenses compared with the same period last year. Q2 gross profit margin reached 22.0% (month-on-quarter + 1.83pcts), mainly due to the continuous improvement of product structure and the decline in the prices of raw materials such as nickel, cobalt and copper in the second quarter, with a net interest rate of 12.3% (month-on-month + 4.11pcts). The larger increase was mainly due to a 297% increase in other income / non-operating income due to government subsidies.

Financial data: the rate of management expenses of 2022H1 decreased year-on-year 1.49pcts, mainly due to the reduction of business hospitality fees and service fees; the rate of R & D expenses decreased significantly compared with the same period last year 4.05pcts, mainly due to the reduction of R & D activities of 22H1 R & D projects according to the project implementation schedule compared with the same period last year. The net cash flow generated by 22H1's operating activities decreased significantly by 1127% to-167 million yuan, mainly due to the increase in operating receivables and inventory caused by the substantial increase in the production and sales of superalloys. The net cash flow generated by investment activities decreased by 49.5% to-114 million yuan compared with the same period last year, mainly due to the purchase of land for the "aviation grade superalloy project with an annual production capacity of 10,000 tons" and increased investment in superalloy production equipment. and pay a deposit for the capital increase project listed by Anji Precision casting in Beijing property right Exchange. The company's receivables / contract negative investigation / prepaid accounts increased by 87.8%, 157% and 612% respectively compared with the end of last year, mainly due to the increase in superalloy business income, the increase in payment received in advance, and the increase in the prepayment of raw materials. Under the production mode of "fixed production by sales", the above data confirm the rapid growth of the company's orders, and the strong demand in the downstream "two machines" areas has laid an incremental foundation for the company's business.

Fund-raising projects promote capacity breakthroughs: as of 2022H1, the company has a total production capacity of 6000 tons of high temperature corrosion resistant alloys, including 3000 tons of cast superalloys and nickel base corrosion resistant alloys, and 3000 tons of deformed superalloys. The company has purchased a vacuum induction melting furnace for the production line of deformed superalloy at the end of 2021 and installed it in June 2022. After it is put into production at the end of 2022, the total production capacity of deformed superalloy will increase to 5000 tons (a total capacity of 8000 tons of high temperature corrosion resistant alloy). The company's IPO fund-raising project "Technical Transformation Project with an additional annual production capacity of 10, 000 tons of aviation grade superalloy" plans to use 855 million yuan to raise funds, and plans to build 6000 tons of deformed superalloy, 2000 tons of deformed superalloy bar and 2000 tons of cast superalloy master alloy. If this fund-raising project is carried out smoothly, the company will form a total production capacity of 18000 tons of superalloy in 2028, and the company's market competitiveness will be further enhanced in the future.

Investment suggestion: as a leader in the alloy material industry, the company has successfully cut into the field of high value-added superalloy products by virtue of its solid production technology and strong R & D strength. the promotion of fund-raising projects will expand the production capacity of superalloy products, and the company will have stronger comprehensive competitiveness. In the future, more new superalloy grades will be tested and put into production, the improvement of profitability brought about by product structure optimization and the gradual release of production capacity after production expansion will be the core driving force for the company's performance release. We estimate that the company's operating income from 2022 to 2024 will be 12.0% 17.7% / 2.2 billion yuan respectively, an increase of 65%, 48%, 24%, and net profit of 1.67% / 3.12% / 445 million yuan, respectively, an increase of 13709% 6max 879% / 43% 6 over the same period last year, corresponding to PE55X / 29x / 21X. Upgrade the rating to "buy".

Risk tips: the risk of rising raw material prices, product brand verification progress is not as expected, fund-raising projects and production progress is not as expected.