整体毛利率略有下滑。2023 年公司实现毛利21.48 亿元，同比下降6.32%，整体毛利率为16.87%，下滑0.66pct。分业务看，公司其他硬质合金/刀片及刀具/粉末制品/难熔金属/硬质合金分别贡献毛利4.84/10.27/1.80/2.26/2.31 亿元， 同比-3.77%/-10.25%/-11.85%/+0.42%/+6.77% 。毛利率分别为Key points of investment
Incident: The company released the 2023 annual report and the 2024 quarterly report. In 2023, the company achieved operating income of 12.736 billion yuan, -2.63% year on year, realized net profit of 485 million yuan, -9.36% year on year, and realized net profit without return to mother of 334 million yuan, or -30.13% year on year. In Q4 2023, we achieved operating income of 3.188 billion yuan, +2.54%/6.20% YoY; realized net profit attributable to mother/net profit of 1.69/97 million yuan, +24.26%/-4.90% YoY and +131.51%/+86.54% month-on-month. In Q1 2024, we achieved operating income of 2,967 billion yuan, -2.94%/-6.93%; realized net profit attributable to mother/net profit of 0.64 to 046 billion yuan, -36.00%/-48.89% year over year, and -62.13%/-52.58% month on month.
Rising raw material prices combined with sluggish demand put pressure on the company's profits. The decline in the company's Q1 performance in 2023 and 2024 was mainly due to low market demand, increased industry competition, and rising prices of raw and auxiliary materials. The price of Q1 white tungsten concentrate (65%) rose 4.26%/4.80% year-on-year in 2023 and 2024, causing the company's profits to be doubly squeezed.
Overall gross margin declined slightly. In 2023, the company achieved gross profit of 2.148 billion yuan, a year-on-year decrease of 6.32%. The overall gross margin was 16.87%, a decrease of 0.66 pcts. By business, the company's other hard alloys/blades and tools/powder products/refractory metals/hard alloys contributed 4.84/10.27/1.80/2.26/ 231 million yuan respectively, or -3.77%/-10.25%/-11.85%/+0.42%/+6.77% over the same period last year. The gross margins, respectively, are
14.11%/33.58%/7.10%/10.43%/15.00%, compared to 2022 -0.16/-0.90/-1.58/-2.40/+4.83pct.
Production of CNC blades and micro drilling products continues to expand. In terms of output, the company produced 140 million CNC blades in 2023, accounting for about 20% of the total domestic output, and produced about 14,000 tons of hard alloy products, ranking first in the world. The company's CNC blades adopt a strategy of running fast in small steps. The technical improvement project continues to advance, and the micro drilling business continues to expand production. In 2023, its Jinzhou Company officially launched a technical transformation project to increase the capacity and production of 200 million micro drills, and Zhuhard Company initiated the construction of an intelligent production line technology transformation project for ultra-fine tungsten carbide powder to improve the ability to guarantee key raw materials.
The injection of persimmon bamboo gardens progressed in an orderly manner, and the self-sufficiency rate of raw materials improved dramatically. The company announced on January 10 that it intends to purchase 100% of the shares of Hunan Shizhuyuan Nonferrous Metals Co., Ltd. held by Minmetals Tungsten Industry Group Co., Ltd. and Hunan Woxi Mining Investment Co., Ltd. by issuing shares and paying cash, and to raise supporting capital by issuing shares to no more than 35 specific investors.
Currently, related work continues. After the injection is completed, the company will form a complete industrial chain integrating upstream mining to downstream processing, and the raw material self-sufficiency rate will be greatly improved.
Investment advice: Since 2024, the price of tungsten concentrate has continued to rise, and the domestic and foreign manufacturing industry is expected to smoothly transfer price pressure and high-end blades will grow steadily. We expect the company to achieve operating income of 136.54/153.28/16.102 billion yuan in 2024/2025/2026, up 7.21%/12.26%/5.05%, respectively; net profit to mother was 584/724/836 million yuan, respectively, up 20.60%/23.96%/ 15.42%, corresponding EPS is 0.42/0.52/0.60 yuan, respectively.
Based on the closing price on May 10, 2024, the corresponding PE corresponding to 2024-2026E was 29.34/23.67/20.51 times, respectively. Upgraded the company's rating to “buy.”
Risk warning:
Risk of falling metal prices, project progress falling short of expectations, risk of policy changes, risk of production and sales falling short of expectations, etc.
