Incidents:

The company announced the 2024 performance forecast. According to preliminary estimates by the finance department, it is expected to achieve operating income of about 0.615 billion yuan in 2024, an increase of about 40.16%; net profit attributable to owners of the parent company is about 95 million yuan, an increase of about 436% year on year; and net profit attributable to owners of the parent company after deducting non-recurring profit and loss is about 62 million yuan, an increase of about 8885% year on year. Comments on this are as follows:

The profit level of 24Q2 in a single quarter exceeded expectations, and operational resilience was highlighted. The company's revenue has maintained a rapid growth trend. According to the performance forecast issued by the company, the company's net profit for the 24Q2 quarter was about 93.66 million yuan, the net interest rate reached about 22.9%, net profit after deducting non-return to mother was about 75.83 million yuan, and the net profit after deducting non-net interest rate reached about 18.5%. (If equity incentive fees are added, we expect the company's 24Q2 net interest rate and deducted non-net interest rate to reach about 21% and 25%, respectively, reaching historically high levels). The 24Q1 company's gross margin was 41.25%, with large year-on-year and month-on-month declines. 24Q2's net margin improved greatly, and we expect the company's 24Q2 gross margin to recover significantly. Changes in the product revenue structure in a single quarter may cause the company's short-term gross margin to fluctuate, and the company's overall operating resilience is strong.

The 3D printing industry is booming, and demand for military and civilian products is expected to resonate. According to the national economic data for the first half of 2024 released by the National Bureau of Statistics, China's 3D printing equipment production increased by 51.6% year-on-year in the first half of the year, and the industry's prosperity level was high. 3D printing has a wide range of applications. In the aerospace and military sector: as 3D printing processes for components in different models of products are gradually solidified, pre-research is expected to bring a large demand for 3D printing services. In addition, commercial aerospace, low-altitude economy and other fields are expected to contribute to the incremental market in the long term; in the industrial and civil sector: driven by continuous cost reduction, the application of 3D printing in the industrial field is gradually deepening, and there is good progress in the fields of consumer electronics and shoe models. With demand for military and civilian products resonating, the industry's boom is expected to continue.

Production capacity is about to be released, and the company's long-term development is secure. The company completed a fixed increase at the end of 2023 and raised more than 3 billion yuan, mainly to increase the machine time for customized metal 3D printing products and the production capacity of metal 3D printing powder materials, with a planned full production value of more than 2.1 billion yuan. In addition, in 2021, the company invested no more than 2 billion yuan in innovative capacity building projects for the metal additive manufacturing industry with its own capital, increasing production capacity by 1,000 units of metal 3D printing equipment after delivery. The company has made forward-looking preparations in terms of equipment, printing services and material production capacity, and will fully enjoy the dividends of the industry's rapid growth.

Profit forecast: The company's net profit for 2024-2026 is expected to be $3.47, 4.99, and 709 million yuan, respectively, with corresponding PE values of 39, 27, and 19 times, respectively, maintaining an “increase in holdings” rating.

Risk warning: The price reduction of military products exceeded expectations; the expansion of new application fields fell short of expectations