Steady growth in performance and maintenance of the “Overweight” rating
Sirui New Materials achieved revenue of 1,180 billion yuan (yoy +18.71%) and net profit to mother of 98.3411 million yuan (compared with the 23-year adjusted data yoy +26.04%). Considering that the downstream sector of the company's copper alloy products is scattered and there is some fluctuation in demand, we lowered its revenue forecast. The company's 2024-2026 EPS is expected to be 0.25, 0.35, and 0.48 yuan, respectively (0.27 and 0.40 yuan before 2024-2025).
Using the segmented valuation method, we gave a target market value of 7.172 billion yuan, a target price of 12.81 yuan (previous value of 13.76 yuan), and an “increase in holdings”.
All four major businesses achieved revenue growth. The gross margin of copper alloys and medical imaging products increased significantly by product. In 2023:1) High-strength and high-conductivity copper alloy materials and products achieved revenue of 534 million yuan, +20.83% year-on-year, and gross margin of 18.33%, +2.54 pct year-on-year. The company's liquid rocket engine thrust interior wall products entered the mass production stage; 2) medium and high voltage electrical contact materials and products achieved revenue of 281 million yuan, +7.52%, gross profit margin of 23.68%, year-on-year -1.62 pct; 3) High-performance metal chromium powder achieved revenue of 59.119 million yuan, +25.34%, gross profit margin 19.08%, year-on-year -1.42pct. The company actively expanded the production capacity of the chrome raw material production line to meet the rapidly growing demand; 4) Medical imaging components achieved revenue of 48,3294 million yuan, the same Ratio +21.16%, gross profit margin 23.24%, +3.85pct year over year.
With the rapid development of downstream domestic medical imaging equipment companies, the company's domestic business is growing rapidly.
2024Q1's performance continued to grow, and the company released its 2024 quarterly report: 2024Q1 achieved revenue of 287 million yuan, +14.26% year-on-year, and achieved net profit of 25 million yuan, or +13.49% year-on-year. The company's inventory at the end of the 2024Q1 period was 294 million yuan, up 18.32% from the beginning of the year. The company's contract debt at the end of the 2024Q1 period was 11.3456 million yuan, an increase of 92.04% over the beginning of the year, which may indicate that the company has sufficient orders in hand and is actively preparing for production and preparation. At the same time, the company continues to develop products in emerging fields. According to the 23rd annual report, 1) optical module chip base/case: the company continues to invest in R&D in the optical communication industry, and the optical module chip base has low expansion and high thermal conductivity tungsten copper materials to achieve mass supply; 2) liquid rocket engine thrust interior wall: the company extends the industrial chain and integrates a series of manufacturing processes from components to components to enhance product market competitiveness.
Continued investment to build a new growth pole, and the implementation of equity incentives shows confidence in development 2024.01.24 The company issued an announcement: it plans to invest 5.1 billion yuan to build the “Industrialization Project for Liquid Rocket Engine Thrust Chamber Materials, Parts and Components”, and plans to invest 8.2 billion yuan to build the “Sirui New Materials Technology Industrial Park Construction Project” to create a multi-dimensional growth pole. The company completed the initial award of the equity incentive plan on 2024.03.15. The company uses the 2024-2025 non-net profit growth rate as the assessment index. The target value is based on 2023, and the 2024/2025 growth rate is not less than 40%/100%. The company's equity incentives set a high target, fully demonstrating the company's confidence in development.
Risk warning: the risk of technological upgrading and iteration; the risk of technology failure to form a product or achieve industrialization.