Key points of investment:

Maintain the target price of 27.07 yuan and maintain the increase in holdings. The company's superalloy business grew steadily, and the subsidiary Xinlitong's export business grew strongly. Maintain an EPS of 0.52/0.59/ 0.69 yuan in 2024-26, give 52 times PE for 24 years, maintain a target price of 27.07 yuan, and maintain an increase in holdings rating.

Overseas business expansion and Xinlitong's performance exceeding expectations led to impressive growth in the company's revenue and net profit. 1) On July 14, the company released a performance forecast. 24H1 achieved net profit of 0.161 billion yuan to 0.196 billion yuan (+4.14%-27.38%). Overseas demand for superalloys in petrochemicals, metallurgy and building materials surged, and Xinlitong's export business exceeded expectations, driving the company's net profit to grow rapidly. 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 compounded the continuous decline in nickel prices to reduce costs, and the company's gross margin and net margin reached new highs in three years.

Downstream sectors such as aviation development can be expected to prosper, and fixed increases will help the company seize market opportunities. Benefiting from China's new-generation aviation equipment assembly demand and expansion in the civil aviation sector, combined with the advancement of the domestic replacement process for aero engines, demand in the downstream market is strong. Nuclear power construction, gas turbine development, and petrochemical equipment upgrades are also providing conditions for growth. At the same time, overseas superalloy supply is facing a shortage, driving the company's export business expansion. Strong downstream demand led to Xinlitong's performance exceeding expectations. The company plans to raise no more than 0.28 billion yuan of capital from the controlling shareholder China Steel Research Institute. The issuance price of the shares is 12.83 yuan/share, and the proceeds are intended to supplement working capital. Facing rapid development opportunities in the downstream market, raising capital helps upgrade and transform the company's production line, and also provides important support for expanding business areas and developing overseas markets.

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.