Core viewpoints

1. In the first three quarters of 2023, the company realized a net profit of 68 million yuan, an increase of 17.25%, an increase of 17.25%, and a single-quarter net profit of 16 million yuan, or 151.81%.

2. The company actively opens up new customers and foreign markets, and the sales revenue of high-strength and high-conductivity copper alloy materials maintains rapid growth, which further drives the company's performance to achieve high growth.

3. the downstream demand of optical module drives the rapid growth of optical module chip base material demand, and the company extends the core preparation technology of W-Cu alloy material to optical module chip base material. at the same time, it supports the rapid development of the optical communication industry to 400G, 800G and 1.6T, and the W-Cu optical module chip base business is expected in the future.

Event

The company releases the third quarter report of 2023

In the first three quarters of 2023, the company achieved operating income of 869 million yuan, an increase of 21.02% over the same period last year, a net profit of 68 million yuan, an increase of 17.25% over the same period last year, and a net profit of 55 million yuan, an increase of 77.47%, an increase of 77.47%, an increase of 151.81%.

Brief comment

The rapid growth of high-strength and high-conductivity copper alloy materials promotes the company's performance to achieve high-strength high-conductivity copper alloy materials are mainly used in new energy vehicles, 5G communications, aerospace and other high-end connector industries. At present, domestic high-strength and high-conductivity copper alloy materials mainly rely on imports, and the company is committed to meeting the domestic downstream customers' demand for high-end connector materials and alleviating their dependence on imports. At present, the company has become one of the major suppliers in this subdivision field. During the reporting period, the company actively opened up new customers and foreign markets, and the sales revenue of high-strength and high-conductivity copper alloy materials maintained rapid growth.

To meet the needs of the new scene of optical module, the demand of tungsten-copper optical module chip pedestal business in the future can drive the rapid growth of optical module chip pedestal material demand, the company extends the tungsten-copper alloy core preparation technology to optical module chip pedestal material, layout new digital infrastructure field, and supports the rapid development of optical communication industry to 400G, 800G, 1.6T.

The inner wall products of liquid rocket engine thrust chamber have entered the stage of mass production. It is expected to achieve the manufacturing capacity of 100 sets of materials, parts and components by the end of 2023. With the rapid development of global commercial aviation, the market demand for liquid rocket engines is increasing rapidly. Thanks to (1) the leading industry of high-strength and high-conductivity copper alloy materials, (2) the core technology and key equipment of high-strength and high-conductivity copper alloy manufacturing, and (3) the inner wall products of the thrust chamber have been verified by key customers, the company is currently leading in the industry. The company actively serves major national space projects and private space enterprises (such as Blue Arrow Aerospace, Interstellar Glory, etc.). At present, liquid rocket engine thrust chamber inner wall products have entered the stage of mass production. at present, the industrial planning of 1000 sets of inner wall materials, parts and components of rocket engine thrust chamber has been started and implemented in stages, and the manufacturing capacity of 1000 sets of materials, parts and components is expected by the end of 2023.

Other business

(1) Medical CT and DR ball tube components: the company applies to many kinds of CT and DR ball tube components, mainly including metal shell assembly, rotor assembly, bearing sleeve, cathode parts, targets, bearings, etc., the company is currently one of the few domestic companies that can provide such products and "one-stop" technical services, and successfully entered the international market in 2021. The company has strong technical strength in this field, and its market share is also expanding.

(2) High performance metal chromium powder: the main application directions of high performance metal chromium include: medium and high voltage contact materials, high-end superalloys, high-end targets, surface spraying and other fields. With the increasing demand for high-end superalloys in the two machines and ultra-supercritical, the business of high-performance metal chromium powder is developing rapidly.

Investment suggestion: the company's net profit from 2023 to 2025 is expected to be 102 million yuan, 151 million yuan and 187 million yuan respectively, and the PE corresponding to the previous share price is 60.55,40.88,32.89 times respectively. Considering the company's position and growth in the copper alloy material industry, the company is given a "buy" rating.

Risk analysis.

1. Iterative risk of technology upgrade. Europe, the United States, Japan and other developed countries have a strong R & D foundation, and their R & D investment, new product incubation speed, product performance and quality improvement speed are far higher than those in China, and high-performance and high-quality products continue to occupy the domestic market. as a result, the company's goal of replacing imports is threatened, and the company's research and development is under pressure.

2. Raw material price fluctuation and hedging management risk. The company's main raw material is copper, affected by the rising price of copper, changes in product structure and other factors, electrolytic copper and other raw materials continue to rise, if the company fails to take effective measures to deal with, it may have an adverse impact on production and operation.

3. The sales volume of the product is not as expected. If the newly developed technology of the company fails to form a product, or the product is unable to achieve large-scale production due to production process, raw material supply and other reasons, or the downstream processing technology of the product can not meet the application needs of the end market, it may cause product sales to fall short of expectations.

According to our estimates, if the sales of high-strength and high-conductivity copper alloy materials and products drop by 5% and 10% compared with the hypothetical value, the company's operating revenue will drop by 2.7% and 5.4% in 2023.