① Huarui Precision said it plans to invest 0.36 billion yuan to build a digital production line project for high-performance bar profiles to provide the company with stable and high-quality hard alloy bars. ② In the first half of 2024, total debt was 1.174 billion yuan, up 48.04% from 0.793 billion yuan in the same period last year; the balance ratio rose to 47.62% from 41.04% in June 2023.
“Science and Technology Innovation Board Daily”, August 6 (Reporter Wu Xuguang) On the evening of August 5, Huarui Precision, a listed CNC tool company, released its semi-annual report.
According to Huarui Precision, the company achieved operating income of 0.41 billion yuan in the first half of 2024, an increase of 14.93% over the previous year; realized net profit of 0.072 billion yuan, an increase of 15.35% over the previous year; and realized net profit of 0.071 billion yuan after deduction, an increase of 19.52% over the previous year.
Regarding changes in revenue, Huarui Precision said that the main thing is that the company actively responds to market changes and promotes the development of the company's various businesses through technological innovation, improvement of sales channels, and strengthening internal management.
Huarui Precision is a manufacturer of tungsten carbide cutting tools. It is mainly engaged in R&D, production and sales of tungsten carbide CNC blades, used in metal material processing in the fields of automobiles, rail transit, aerospace, precision molds, etc.
In terms of gross margin, Huarui Precision's gross margin has been declining continuously for many years. From 2020 to 2023, the company's gross margins were 50.90%, 50.30%, 48.85%, and 45.47%, respectively. As of the first half of this year, the company's gross margin fell further to 42.60%, a year-on-year decrease of 2.22 percentage points.
Regarding the reason for the decline in Huarui Precision's gross sales margin, Dongwu Securities pointed out in a research report on August 6 that in the first half of 2024, the company's hardening tools were still climbing in production capacity, and various fixed costs were high.
As of the semi-annual report, Huarui Precision's operating cost was 0.236 billion yuan, an increase of 19.57% over the previous year.
In addition to this, the “Science and Technology Innovation Board Daily” reporter noticed that price fluctuations of tungsten carbide powder and cobalt powder, the main raw materials of the company's hard alloy tools, affected the company's performance to a certain extent.
According to statistics from three parties in the market, as of June of this year, the average price of black tungsten concentrate was 0.15 million yuan/ton as one of the raw materials for preparing tungsten powder, down 1.9% from the previous month and up 23.8% from the previous year.
Is the factory price of the company's products affected by factors such as increased market competition? Huarui Precision said that the company's pricing strategy has always remained stable, and the final sales price is determined based on factors such as product performance, competitive pricing, market conditions, customer procurement scale, and competitive strategy on the basis of production costs.
In terms of cash flow, during the reporting period, Huarui Precision's operating cash flow was 0.9208 million yuan, down 106.32% year on year; investment cash flow was 0.149 billion yuan, down 607.19% year on year; financing cash flow was 0.136 billion yuan, up 242.88% year on year; and Huarui Precision's net cash flow was -14.197 million yuan, up 72.22% year on year.
Huarui Precision stated that the reasons for the changes in net cash flow from the company's operating activities and net cash flow from investment activities were due to an increase in cash payments to employees and a decrease in cash received by the company to recover investments.
The company's debt also increased during the reporting period. In the first half of 2024, Huarui Precision's total debt was 1.174 billion yuan, an increase of 48.04% over 0.793 billion yuan in the same period last year; however, the balance ratio rose to 47.62% from 41.04% in June 2023.
It should be pointed out that on the evening of August 5, Huarui Precision also issued an announcement stating that it plans to invest 0.36 billion yuan to build a digital production line for high-performance bar profiles.
Huarui Precision said that currently most of the hard alloy bars required for the company's overall hard alloy tool production rely on external procurement. After completion of this project, it will increase the annual production capacity of 1,000 tons of high-performance bars to provide the company with stable hard alloy bars.