产品结构不断优化，产品重心向高附加值市场转移。根据公司半年报，2024H1 公司切削刀具、硬质合金轧辊、精密零件、硬面材料及球齿等多个品种规模位居中国第一。分产品类别来看，公司2024 年上半年实现1）切削刀具及工具：营收15.72 亿元，同比9.44%，毛利率30.94%，同比2.32pcts。2024 年上半年公司数控刀片销量超6000 万片，同比增长超20%；PCB 工具持续突破长径比极限，试制出超大长径比微型钻头（长径比超50 倍），开发出新型涂层工艺，部分产品寿命提升3-4 倍；2）其他硬质合金：营收16.95 亿元，同比-5.75%，毛利率12.66%，同比-0.64pcts；3）难熔金属：营收12.21 亿元，同比+16.53%，毛利率8.69%，同比-4.33pcts；4）粉末制品：营收15.51 亿元，同比+20.79%，毛利率8.61%，同比+0.21pcts。Incidents:
The company released its 2024 semi-annual report. In the first half of 2024, it achieved operating income of 6.807 billion yuan, an increase of 3.98% year on year; realized net profit of 0.147 billion yuan to mother, a year-on-year decrease of 39.30%, and the performance was in line with expectations. In the 2024Q2 single quarter, the company achieved operating income of 3.84 billion yuan, up 10.06% year on year and 29.44% month on month; net profit to mother was 83.1097 million yuan, down 41.62% year on year, up 30.16% month on month.
Comment:
The product structure is continuously optimized, and the product focus is shifting to a high value-added market. According to the company's semi-annual report, 2024H1 ranks first in China in terms of cutting tools, hard alloy rollers, precision parts, hard surface materials, and ball teeth. By product category, the company achieved 1) cutting tools and tools in the first half of 2024: revenue of 1.572 billion yuan, 9.44% year-on-year, gross profit margin of 30.94%, 2.32pcts year-on-year. In the first half of 2024, the company sold more than 60 million pieces of CNC blades, up more than 20% year on year; PCB tools continued to break through the limit of length to diameter ratio, prototyped ultra-long diameter miniature drills (more than 50 times the length to diameter ratio), and developed new coating processes, which increased the life span of some products by 3-4 times; 2) Other hard alloys: revenue of 1.695 billion yuan, -5.75%, gross profit margin of 12.66%, year-on-year; 3) Refractory metals: revenue of 1.221 billion yuan, yoy + 16.53%, gross profit margin 8.69%, year-on-year -4.33pcts; 4) Powder products: revenue 1.551 billion yuan, +20.79% year-on-year, gross profit margin 8.61%, +0.21pcts year over year.
Downstream demand support is weak, and profit margins are under pressure in the short term due to fierce price competition for some products. According to the company's semi-annual report, 2024H1's gross profit margin was 14.91%, -1.34 pcts year on year; net profit margin was 2.66%, -1.62 pcts year on year. Single 2024Q2 gross profit margin 15.49%, +0.10pcts year on year, +1.33pcts month on month; net profit margin 2.63%, -1.93pcts year on year, -0.08pcts month on month. The 2024H1 sales/management/R&D/finance cost rates were 3.00%/4.12%/3.96%/0.58%, respectively, -0.13/ -0.34/+0.42pcts, respectively. The increase in the 2024H1 R&D cost rate was mainly due to increased investment in technology research and development. The increase in the financial cost ratio was mainly due to changes in the RMB exchange rate, and the resulting exchange revenue decreased by 0.031 billion yuan year on year.
It successfully won the bid for the Phase II tool turnkey project of an enterprise owned by China Airlines to help transform and upgrade high-end manufacturing. The company bid for the first phase of the company's turnkey project in 2021. After the completion of the first phase of the project, the company's tool localization rate increased markedly. The second phase of the turnkey project is a continuation of the first phase of the turnkey project. Compared with the first phase, the period is longer and the amount is larger. The period has increased from three to five years until the end of September 2029. The number of turnkey service workshops and service equipment has increased significantly compared to the first phase.
The profit forecast was lowered and the “buy” rating was maintained. Considering that the current downstream demand is still weak and that raw material prices are at a high level, affecting the company's business profits such as tools, refractory metals, hard alloy products, etc., we lowered our profit forecast. The net profit for 2024-2026 is 0.415/0.534/0.626 billion yuan, respectively (the original 24/25/26 was 0.52/0.621/0.731 billion yuan). The company's current stock price (2024/08/23) corresponds to 2024/25/26 PE to 27, 21, respectively. 18X, considering: 1) The company's PE (TTM) is currently 29, which is at 37.8% in the past 4 years, which is a low valuation; 2) the company actively promotes the high-end transformation of the tool business, and its product focus continues to shift to a market with high added value and clear competitive advantage, and profitability is expected to be repaired; 3) The company's business revolves around the tungsten industry chain. In the future, with Kakizhuyuan's injection, it will further develop synergies to increase the company's profits and maintain the purchase rating.
Risk warning: risk that market demand falls short of expectations; risk of continuing price increases for raw materials; risk that tungsten ore injection progress falls short of expectations.
