Performance growth is in line with expectations, and the new materials business is developing well

On the evening of April 28, the company released its 2023 annual report. In 2023, the company achieved operating income of 8.187 billion yuan, a year-on-year increase of 10.55%; achieved net profit of 249 million yuan, an increase of 18.19% over the previous year; realized net profit without deduction of 220 million yuan, an increase of 17.53% over the previous year.

Net operating cash flow was 786 million yuan, up 33.12% year over year.

In Q4 '23, the company achieved operating income of 2.143 billion yuan, up 29.94% year on year, up 17.79% month on month; realized net profit of 54 million yuan, up 31.12% year on year and 40.93% month on month.

Tungsten and molybdenum products actively explore emerging markets and increase market share

Antai Tianlong is actively expanding emerging markets around the application of tungsten and molybdenum products, strengthening research and development of new product application technology and transformation of results. The amount of new contracts signed exceeded 2 billion yuan, an increase of 11.56% over the previous year, and revenue of 2.17 billion yuan, an increase of 22.98% over the previous year. Semiconductor plasma injection terminal products have officially passed the review by SMIC to achieve batch supply. The self-developed tungsten alloy multi-leaf grating accounts for 70% of the global market share of radiotherapy equipment and won the national single championship product.

Relying on the advantages of collaborative production, capacity expansion is smooth

In terms of magnetic materials, Antai Magnetic Materials relied on a stable rare earth raw material resource guarantee system and the cooperative production advantages of magnetic materials from Beijing, Lu, and Mongolia to achieve operating revenue exceeding 2.2 billion yuan, and net profit increased 12% year on year. More than 5 new major customers have been added, and new breakthroughs have been made in the field of new energy electric vehicles. The Antai AGCO rare earth permanent magnet 1000 ton technical improvement project was completed, inspected and put into operation. Antai North has basically completed a project with an annual output of 5,000 tons of high-end rare earth permanent magnet products, and the production capacity of high-end rare earth permanent magnet products has reached 10,000 tons.

Vigorously adjust the product structure to create a second growth point

In the field of nanocrystals, the company launched new products such as broadband and ultra-thin strips, continuously enriching the application of the nanocrystalline strip product line in the field of electric vehicles, and achieved sales volume of nanocrystalline strips exceeding 4,500 tons, an increase of 26% over the previous year. In 2023, exports of amorphous strip reached 15,000 tons, a year-on-year increase of 46%.

Antai Heye has vigorously adjusted the product structure, focusing on promoting new products such as powdered high speed steel and jet high speed steel, and continuously expanding the incremental market for new products. The contract amount was 1.29 billion yuan, an increase of 9.32% year on year, and order volume increased 7.96% year on year. The self-designed and built powder high-speed steel project was successfully put into operation. The order volume for products such as high-performance high-speed steel, powder high-speed steel, and jet steel exceeded 6,300 tons, accounting for 35.6%, an increase of 4.1% over the previous year. The project to invest in the construction of a 9,000 tons/year slab production line has entered the implementation stage, and the production capacity of high-end high-speed steel has steadily increased.

Antai Powder continues to develop new diamond tool products and customer solutions with core competitiveness, and achieved new breakthroughs and leaps in the new development stage. The new contract amount exceeded 530 million yuan, an increase of 8.99% over the previous year, operating income of 490 million yuan, and net profit of 41 million yuan, an increase of 41.27% over the previous year. Among them, the Thai subsidiary of Superhard achieved a net profit of 25 million yuan, an increase of 380% over the previous year.

AI technology boosts development in multiple fields and increases demand for new materials such as nanocrystals

While meeting consumers' demand for high-quality, high-performance electronic products, new metal materials also promote continuous innovation and progress in material technology and manufacturing processes. According to Baszhe Consulting's data, the global wireless charging market was RMB 10.164 billion in 2022, and the capacity of the wireless charging market in China was RMB 28.677 billion, and the market size is expanding rapidly.

3C Electronics has always been the main application area for MIM injection molding products, accounting for 50%. It is a good interpretation of MIM technology suitable for the application of miniaturized and complex precision components.

Investment advice

We expect the company to achieve operating income of 101.51/119.89/13.704 billion yuan in 2024/2025/2026, up 23.98%/18.11%/14.30% year on year; net profit to mother of 3.79/5.02/587 billion yuan, up 51.80%/32.53%/16.98% year on year respectively, corresponding EPS of 0.36/0.48/0.56 yuan respectively. Based on the closing price of 9.06 yuan on May 10, 2024, the corresponding PE corresponding to 2024-2026E was 25.14/18.97/16.21 times, respectively. First coverage, giving a “buy” rating.

Risk warning:

Macroeconomics falls short of expectations, downstream demand falls short of expectations, project construction falls short of expectations, etc.