Core views:

New production capacity was released, and the 24H1 performance growth rate exceeded 87% year-on-year. According to the 2024 semi-annual performance advance announcement of Yongjin Co., Ltd., 24H1 net profit due to mother is expected to be 0.4-0.45 billion yuan, an increase of 87%-111% over the previous year, after deducting non-return net profit of 0.28-0.325 billion yuan, an increase of 41%-64% over the previous year. 23H2 Guangdong Yongjin's “annual processing 0.35 million ton wide precision stainless steel strip technology transformation project” and Zhejiang Yongjin's “0.195 million ton annual processing ultra-thin precision stainless steel plate belt project” were released as scheduled, and Vietnam's Yongjin production capacity utilization rate was further improved. 24H1 confirmed a net income of 108.9 million yuan in relocation compensation for Zhejiang Headquarters Area A.

Production capacity investment in traditional cold rolling and new materials has been steadily promoted, and the 24-25 year rollout period will be ushered in. According to the company's 23 annual report, (1) In terms of cold rolling projects, Zhejiang Yongjin's ultra-thin precision stainless steel strip project with an annual output of 0.195 million tons was put into operation at 23M12; Guangdong Yongjin's wide-width precision stainless steel strip technological transformation project with an annual output of 0.35 million tons was put into operation at 23M7. Jingjiang Yongjin's 0.4 million tons/year wide stainless steel strip project, Vietnam's Xinyue precision stainless steel strip phase I (0.08 million tons) and phase II (0.18 million tons) are expected to be tested in 24-25 years; (2) In terms of new material projects, Zhejiang Prisai's 0.075 million ton/year cylindrical battery special case material project and Zhongyuan Titanium Industry's new titanium alloy material project with an annual output of 0.015 million tons are expected to be tested in 2024.

Profit forecast and investment advice: The company's 24-26 EPS is expected to be 2.09/2.40/2.55 yuan/share, corresponding to the closing price on July 10, 24, and the 24-26 PE is 9/8/8 times. Since the company went public, the average PE value is 19 times higher. The company's profit stability is superior to that of comparable companies. At the same time, based on historical valuation levels and future growth, the comparable company's 2024 Wind unanimously anticipated PE valuation. The company was given 14 times the 24-year PE valuation, with a corresponding reasonable value of 29.24 yuan/share, giving the company a “buy” rating.

Risk warning: The company's new production capacity construction fell short of expectations; raw material price fluctuations exceeded expectations; market demand growth fell short of expectations.