Incident: The company released its 2024 semi-annual report, achieving revenue of 2.02 billion yuan, -4.33%; net profit to mother 0.348 billion yuan, -17.24% year over year; net profit after deducting non-attributable net profit of 0.312 billion yuan, -16.37% year over year.
Superconducting products maintain a high level of popularity, and titanium and superalloys are under pressure. By product, high-end titanium alloy materials achieved revenue of 1.284 billion yuan, or -4.07%, but sales continued to improve, making significant progress in helicopters, commercial aircraft, commercial aviation engines, gas turbines, etc., and obtained supply qualifications for multiple models; superconducting products achieved revenue of 0.482 billion yuan, +19.95% YoY. External orders continued to increase, completing delivery tasks for superconducting wires used in domestic nuclear fusion CRAFT projects, and began batch supply of high-temperature alloy materials to the BEST fusion project; high-temperature alloy materials achieved revenue in batch 0.156 billion yuan, or -44.67% year over year. Performance is under pressure, but the main brands have passed product certifications for multiple “two aircraft”, aerospace models, and multiple users.
Investment in R&D has increased, and contract debt has increased dramatically. During the reporting period, the company's gross profit margin was 32.03%, -0.26pct year on year, net profit margin 17.45%, and -3.0pct year on year. In terms of period costs, R&D expenses were 0.179 billion yuan, +37.68% over the same period, increasing R&D investment in major product areas to ensure future competitiveness. Management/financial/sales expenses were 0.069/0.018/0.013 billion yuan, respectively, +4.32%/+6.11%/+10.81% year-on-year.
The contract debt was 0.292 billion yuan, +106.46% from the beginning of the reporting period, due to the company receiving advance payments for superconducting products during the reporting period; inventory was 3.45 billion yuan, +3.23% compared to the beginning of the period, of which 1.56 billion yuan was in stock, +12.26% at the beginning of the period, or indicates that the company is actively preparing for production and preparation.
The construction of the superconducting wire project has been completed, and many constructions are progressing steadily. During the reporting period, the company's fund-raising project “High Performance Superconducting Wire Industrialization Project” was completed, and the company's superconducting wire production capacity was greatly increased, and the delivered products received unanimous praise from customers; the entire superalloy phase II production line was completed, thermal testing was completed, and trial production began. At the same time, the company independently designed and built a superalloy return material treatment line, which has now been put into trial production, which will further reduce the production cost of superalloy bars.
Investment advice: The company's net profit for 24/25/26 is expected to be 0.893/1.166/1.385 billion YOY +18.7%/+30.6%/+18.8%. Maintain an “Overweight” rating.
Risk warning: Company orders fall short of expectations; project construction falls short of expectations; risk of fluctuations in raw material prices.