The company is a high-tech enterprise focusing on customized precision stamping special steel materials. Through independent R&D and technological innovation, the company is deeply involved in the field of precision stamping special steel materials. Unlike the characteristics of large steel mills with large market capacity and the ability to implement large-scale and standardized production, the company can directly meet the small-batch and customized market needs in many segments, thus forming complementary advantages and differentiated competition with large steel mills in terms of products and processes, and steadily improving profitability.

The demand for auto parts continues to grow, and the application field of fine rolled steel continues to expand. The application field of fine blanking special steel is mainly automobile parts, and parts processed by fine blanking have the advantages of smooth cutting surface, high dimensional accuracy, and high flatness. Demand for precision-stamped steel is expected to continue to be boosted with the growth in automobile consumption in China and the increase in bicycle usage under the lightweight trend. Furthermore, in recent years, domestic demand for precision stamping parts in non-automotive fields such as cutting tools and construction machinery has also maintained a relatively rapid growth rate.

The company has mastered core technology in heat treatment and precision cold rolling. The company has mastered unique equipment transformation technology, and has mastered a total of 8 core technologies in the core process of heat treatment and precision cold rolling processes, improving production efficiency and energy utilization efficiency, forming the ability to meet the high quality and special product requirements of customers, and helping the company continuously achieve domestic replacement of high-end products.

Master high-quality customer resources and have sufficient orders on hand. The company continues to improve production capacity and is committed to cutting-edge technology in the market. With its strict quality control system and rapid response mechanism, the company provides customers with high-quality products and services. Currently, it has established long-term stable cooperative relationships with many well-known domestic and foreign auto parts suppliers such as Mubel and Magna, and has sufficient orders in hand.

Seize demand to unlock opportunities and actively expand production capacity. The company currently has a production capacity of 140,000 tons, and its production capacity is already in the first tier of the domestic industry. Its IPO fundraising project plans to reinvest in a project with an annual output of 40,000 tons of precision high-carbon alloy steel strips and a project to build an R&D center. Among them, the project with an annual output of 40,000 tons of precision high-carbon alloy steel strips has a total investment of 220 million yuan, and the total investment of the R&D center construction project is 48.3 million yuan. The fund-raising project will further expand the scale of the company's production capacity and enhance the company's position in the industry.

Equity incentives+targeted increases, demonstrating the company's confidence. On October 26, 2022, the company granted the first batch of 1.8 million second-class restricted shares to 31 motivators, including some directors, executives, and core employees, which is conducive to ensuring the stability of the core team, mobilizing employee enthusiasm, and laying the foundation for the company's long-term development. Furthermore, the company issued 3.6 million shares to Hesheng Holdings, an enterprise where the actual controller and controlling shareholder Qian Hesheng holds 100% of the shares, demonstrating the confidence of the actual controllers in the future operations of the company.

Profit forecast and valuation: The future production capacity of Xianglou New Materials will be further increased, the product structure optimized, and the operation is stable. We expect the company's net profit from 2023-2025 to be 1.90, 2.14 and 258 million yuan respectively. Corresponding to the current price, PE is 17/15/12 times, respectively, covering the first time, giving it a “recommended” rating.

Risk warning: risk of raw material price fluctuations, risk of automobile industry cycle fluctuations, risk of project progress falling short of expectations, etc.