Introduction to this report:

24Q1 revenue +28.61%, net profit to mother +57.74%, contract debt +113.38%. Downstream demand for aerospace engines grew steadily, benefiting from the supply gap caused by overseas superalloy shortages, and the subsidiary Xinlitong grew more than expected.

Overinvestment is expected to launch a number of exhibitions:

Maintain the target price of 27.28 yuan and maintain the increase in holdings. The company's traditional casting, deformation, and new superalloys for aerospace engines grew steadily, benefiting from insufficient overseas superalloy supply, and the subsidiary Xinlitong's export business grew strongly. Maintain the 2024-26 EPS at 0.52/0.59/0.69 yuan, give 52 times PE in 24, maintain the target price of 27.28 yuan, and maintain the holdings increase rating.

The decline in nickel prices has led to a reduction in the cost of finished products, and overseas business has driven high growth in the company's revenue and net profit. 1) The company achieved revenue of 799 million yuan (+28.61%) in 24Q1 and achieved net profit of 95 million yuan (+57.74%). Overseas demand for superalloys in petrochemicals, metallurgy and building materials surged, and Xinlitong's Q1 revenue and profit growth exceeded expectations. 2) The company's 24Q1 gross profit margin was 33.16% (+4.61pcts), and the net profit margin was 16.13% (+4.3pcts). Overseas business volume combined to reduce the cost of high-temperature alloy finished products brought about by the continued decline in nickel prices. The company's gross profit margin and net profit margin both hit new highs in the past three years.

Xinlitong's performance was strong, and the C919 received a new order from Air China. 1) Compared with the US military, there is still a lot of room for improvement in China's aviation equipment, and demand for the company's downstream aviation development can be expected; 2) On April 6, Air China issued an announcement to sign the C919 procurement agreement. Over the past 23 years, Air China and China Eastern Airlines have successively signed procurement agreements with COMAC to order 100 C919 aircraft (extended range type) and 100 (basic type), respectively, to accelerate the development of the company's downstream civil aircraft sector; 3) the company's petrochemical, metallurgical, and building materials sectors benefit from export driven by a shortage of overseas superalloy supply, and Xinlitong has exceeded expectations; 4) The company is one of the enterprises with the most advanced technical level and the most complete production range in the field of superalloys and lightweight alloys in China. It is expected to benefit from increased industry demand and achieve continuous growth.

Catalysts: Export demand surged due to insufficient supply of superalloys overseas.

Risk warning: The company's new product development progress falls short of expectations, and the company's customer needs fall short of expectations.