Introduction to this report:
The company's results for the first half of 2024 fell slightly short of expectations. The company's downstream demand is strong, the company continues to explore potential, and production continues to rise. It is expected that the company's production will continue to be released as new production capacity is launched.
Key points of investment:
Maintain an “Overweight” rating. In the first half of 2024, the company achieved revenue of 0.708 billion yuan, up 23.11% year on year, and realized net profit of 0.094 billion yuan to mother, up 16.4% year on year. The company's performance was slightly lower than expected. Considering the increase in the company's expenses side, the company's net profit to mother in 2024-26 was reduced to 0.2/0.24/0.279 billion yuan (previously 0.237/0.282/0.327 billion yuan), and the corresponding EPS was 2.53/3.03/3.53 yuan, respectively. Considering the decline in the valuation level of companies in the same industry, referring to similar companies, the company was valued 15 times PE in 2024, and the company's target price was lowered to 37.95 yuan (originally 48.75 yuan) to maintain the “gain” rating.
Demand remains strong, and quarterly gross profit continues to rise. In the first and second quarter of 2024, the company achieved revenue of 0.35 billion and 0.357 billion, respectively, up 35.38% and 13.06% year-on-year, and achieved gross profit of 0.087 and 0.09 billion yuan, respectively, up 31.82% and 12.5% year-on-year. Against the backdrop of increased competition in the downstream automobile industry, the company's fine blanking materials, as general components suitable for new energy vehicles and fuel vehicles, have obvious price advantages, efficiency advantages and service advantages compared to overseas suppliers. Therefore, demand continues to be strong, and the company fully enjoys the opportunities brought about by changes in the industry pattern and has achieved rapid development.
Actively adjust the structure and expand overseas markets. While enjoying increasing domestic demand, the company actively lays out overseas markets. At present, it has achieved coverage of overseas production bases for many international customers, and overseas business may become a new growth point for the company's performance. In the automotive sector, in addition to traditional products, the company has begun to lay out more fine blanking materials for new energy vehicles; in addition, the company is actively adjusting the product structure to increase the proportion of high-margin products. The overall gross margin of the company's products may rise as new plant production capacity is implemented in the future and supporting equipment and process upgrades are upgraded.
The launch of the fund-raising project brought about an increase in production capacity, and the repurchase showed confidence. The company has a production capacity of about 0.16 million tons in 2023. The fund-raising plant project in Anhui is expected to be completed by the end of 2024, and it is expected to release 0.04 million tons of production capacity in 2025. The total production capacity of the company's fund-raising projects is 0.15 million tons. After delivery, the company's production capacity will reach 0.3 million tons, and the company's production is expected to increase steadily. The company announced on July 18, 2024 that it intends to repurchase no less than 0.05 billion and no more than 0.1 billion yuan for cancellation or equity incentives, demonstrating confidence in the company's development.
Risk warning: Demand for automobiles has declined sharply, and raw material prices have fluctuated greatly.