This report is read as follows:
The company's performance in the first half of 2023 is in line with expectations. The company actively opens up new markets and new customers to counter the downward demand for consumer electronics. The fund-raising project has landed steadily, the cost reduction process continues to advance, and the expected output and performance will be released steadily.
Main points of investment:
[Wei T holds ab "le increases S holds um" m comments on a-level ry.] The company achieved a net profit of 38 million in the first half of 2023, down 32.36% from the same period last year, and the company's performance met expectations. In 2023-25, the EPS forecast of the maintenance company is 1.56 pound 1.93 plus 2.09 yuan, and the corresponding net profit of return to the parent is 1.33 and 165 million respectively. Taking into account the downward valuation level of companies in the same industry, refer to similar companies, give the company a valuation of 40 times PE in 23 years, lower the company's target price to 62.4 yuan (formerly 69.69 yuan), and maintain the "overweight" rating.
Open up new customers, new markets, and continue to invest in research and development. The company continues to invest in research and development, aiming at the shortage of ultra-micro inductor powder downstream to carry out process optimization work to improve the output rate of ultra-fine powder. In the context of the decline in consumer electronics demand, the company develops in the fields of cars, servers and so on. The company has completed the development of high-strength steel, light steel and other materials, and made new breakthroughs in the field of consumer electronic structures. In the field of soft magnetic functional parts, the company's related powder materials have been included in the list of relevant suppliers. Relying on its own technological advantages, the company actively develops new products, matches the new needs of the downstream, and constantly strengthens the main business.
Fund-raising projects are expected to land, carbonyl iron powder production capacity ushered in an increase. The company's "annual output of 6000 tons of carbonyl iron powder and other products project", "high-performance ultra-fine metal and alloy powder expansion project" is expected to be put into production in September 2023. After the project is put into production, the production capacity of carbonyl iron powder and alloy powder will further increase, and the company's metal powder production is expected to increase from 2023 to 2024.
The key cost reduction process has made a breakthrough, and there is a broad space for the future. A breakthrough has been made in the cost reduction process of carbonyl iron powder by using low content iron source instead of high purity iron material. On the one hand, the products produced by this innovative process can partially or completely replace the lower performance competition products such as electrolysis and atomization, and expand new application fields, on the other hand, it can increase the demand of the existing downstream. This cost reduction process opens up the growth space of the company in the future.
Risk hint: new production capacity is not as expected, and consumer electronics demand continues to decline.