Event: Research on Huarui Steel Casting On November 27th, we conducted a survey on Huarui Steel (002204). Comment: Based on our bank, we dig deep into potential. Currently, the company has a total of three business segments. As of mid-2009, the power plant casting business and wind power casting business (currently reflected in the heavy machinery casting business) accounted for about 80% of the company's total revenue. In the future, with the further expansion of the company's wind power and nuclear power business production capacity, this share is expected to continue to increase. Other mechanical casting and marine casting businesses are an important complement to power plant and wind power foundry businesses. Over the years, the company has adhered to the main business of steel casting and cast iron, and has actively increased technical investment. Currently, the technical level of many businesses is at the advanced level in China. The company was the first company to be able to forge million-kilowatt ultra-supercritical unit-level cylinders on its own, and it is also an enterprise that can forge 700,000 kilowatt mixed-flow hydroelectric power unit rotors on its own. In recent years, with the gradual passing of the peak of thermal power construction, the company's most value-added business, the thermal power casting segment, has shrunk to a certain extent. But on the other hand, there is a trend in the industry where orders are concentrated towards higher installed capacity. As an enterprise with the production capacity of cylinder castings for ultra-supercritical units, the company's advantages in high-end products will surely be gradually reflected in competition, thus increasing the company's market share. Based on this judgment, we are still full of confidence in the company's future thermal power casting business, and it is estimated that its annual thermal power casting revenue will remain at a level of around 300 million yuan. Open up the market, the wind power wheel hub ductile iron parts sub-industry has continued to grow in recent years along with the development of the wind power industry. According to estimates, the current total demand for wind power wheel parts in China is about 400,000 tons. Although there are many companies that produce castings, the top eight to ten companies have a production capacity of more than 200,000 tons. The company expects to achieve a production capacity of 50,000 tons/year after delivery, and currently it can achieve a production capacity of 30,000 tons/year. The wheel castings of wind turbines of different grades vary in weight. Among them, the tonnage of 1.5 MW wind turbines is large, and the weight is generally about 12 tons; including components such as input boxes and bases. As a rising star in wind power forging and casting, the company adopted a strategy from a high starting point and targeting the MW-level high-end market. This year, it mainly signed contracts with its brother company Dalian Heavy Industries Electromechanical Equipment Co., Ltd. With the success of product trials and the maturity of qualifications, the company has also gradually established ties with important domestic and foreign wind turbine manufacturers such as Ende in Germany and Vestas in Denmark. It is expected that it will gradually become an important forging casting supplier for these manufacturers in the future. At the same time as production capacity is expanding, the company is actively developing products and striving to expand the wind power forging and casting product menu in order to enrich product variety, increase revenue, and reduce risk. The company is also actively expanding the nuclear power market. Forged castings for nuclear power units mainly refer to nuclear island pump housings. On average, each nuclear island requires 3-4 pump housings. The average weight of each pump shell is about 2 to 30 tons, and the tonnage price is estimated at 400,000 to 500,000. Based on this calculation, each 1 million kilowatt nuclear island can provide about 40 million pump housings. Currently, the company is conducting research and development of nuclear power products. If the company can successfully produce nuclear power castings, it will mark that the company has reached the top level in the field of steel castings.