Core views

The company released its 2024 semi-annual report. Revenue for the first half of 2024 was 4.831 billion yuan, +28.33% year-on-year. Net profit attributable to shareholders of listed companies was 0.644 billion yuan, -9.56% YoY. Net profit attributable to shareholders of listed companies after deducting investment income from joint ventures was 0.589 billion yuan, +81.06% over the same period last year. The company's high-end products gradually expanded in the first half of the year, accounting for 22% of revenue, +2pct compared to the same period last year. Considering the large increase in revenue in the past year, the actual revenue of high-end products increased by about 40% compared to the same period last year. EBK's large orders will be gradually delivered starting in the middle of this year, and will contribute an important increase in revenue and profit over the next 2 years. The company plans to invest in the construction of a “high-performance pipe project with an annual output of 20,000 tons for nuclear energy and oil and gas”. The project is an internal self-built project to guarantee the steady growth of the main business sector in accordance with the company's medium- to long-term strategy and investment development plan. After the project is completed and put into operation, it will strengthen the company's market competitiveness and comprehensive strength.

occurrences

The company released its 2024 semi-annual report.

Revenue for the first half of 2024 was 4.831 billion yuan, +28.33% YoY. Net profit attributable to shareholders of listed companies was 0.644 billion yuan, -9.56% YoY. Net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 0.653 billion yuan, +33.99% year over year.

Net profit attributable to shareholders of listed companies after deducting investment income from joint ventures was 0.589 billion yuan, +81.06% over the same period last year. Basic earnings per share were $0.66, -9.56% YoY.

Among them, revenue for the second quarter was 2.442 billion yuan, +17.08% year-on-year. Net profit attributable to shareholders of listed companies was 0.316 billion yuan, or -34.09% year-on-year. Net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 0.313 billion yuan, +16.34% year over year.

Basic earnings per share were $0.32, or -34.09% YoY.

Brief review

High-end products have been released, and revenue has increased dramatically.

The company's high-end products gradually expanded in the first half of the year, accounting for 22% of revenue, +2pct compared to the same period last year. Considering the large increase in revenue in the past year, the actual revenue of high-end products increased by about 40% compared to the same period last year. In terms of revenue by industry, petroleum, chemical and natural gas accounted for 62.04%, +4.89pct; power equipment manufacturing accounted for 13.34%, -1.09pct year on year; other machinery manufacturing accounted for 12.44%, -2.62 pct year on year; other inseparable industries accounted for 12.18%, -1.18pct year on year. Due to the continuous release of the company's core products, such as nickel-based alloy tubes, etc., the petrochemical industry's share of revenue has further increased. Although the share of revenue in other industries has declined, revenue is still growing rapidly. By region, the domestic share was 65.46%, -7.06pct year on year; the overseas share was 34.54%, +7.06pct year on year.

Thanks to EBK's leading position in the international composite pipe market, the company's overseas revenue increased 61.34% year over year. In the future, the company will also continue to pay attention to investment opportunities for high-quality overseas companies.

EBK orders have begun to be delivered, with significant increases over the next two years.

Last year, EBK, the company's wholly-owned overseas subsidiary, signed a contract with Abu Dhabi National Petroleum Corporation to supply pipeline steel pipes with a total length of about 92 kilometers. The total contract price (tax included) was about 0.592 billion euros (converted to RMB 4.6 billion). The order will be gradually delivered starting in the middle of this year and will contribute a significant increase in revenue and profit over the next 2 years.

Facing the “15th Five-Year Plan”, we will continue to optimize the product structure.

In June of this year, the company announced that it intends to invest in the construction of a “high-performance pipe project with an annual output of 20,000 tons of nuclear energy and oil and gas”. The project is an internal self-construction project to ensure the steady growth of the main business sector in accordance with the company's medium- to long-term strategy and investment development plans. After the project is completed and put into operation, it will strengthen the company's market competitiveness and comprehensive strength, promote the company's sustainable development, accelerate the company's product and business layout, and enhance the company's brand influence. Facing the “15th Five-Year Plan”, the company continues to deepen its main business, improve its domestic and foreign operation layout, introduce outstanding talents, increase investment in product research and development and technological innovation, continuously develop new products and technologies, and always take increasing the market share of the company's high-end products as its core strategic goal, thus bringing more benefits.

Profit forecast and investment advice: The company's revenue for 2024-2026 is expected to be 10.73, 12.82, and 12.79 billion yuan, respectively, and net profit due to mother is 1.46, 1.75, and 1.96 billion yuan, respectively. The corresponding PE is 12.8, 10.8, and 9.6 times, respectively, maintaining a “buy” rating.

Risk analysis: The main raw materials of the company's stainless steel products are stainless steel round steel, stainless steel coils, and stainless steel flat plates. Among them, the price trend of metals such as Ni/Cr/Mo is a weather vane for the price trend of stainless steel and special alloys, so the impact of the price trend of alloy elements on the company's production and operation is particularly important. If the price of raw materials continues to rise in the future, the procurement of raw materials will take up more of the company's working capital, thereby increasing the pressure on the company's capital turnover; if the price of raw materials continues to fall, it will make it more difficult to manage the company's raw material inventory and cause inventory price losses. Fluctuations in the prices of major raw materials will also cause the company's product gross margin index to fluctuate to a certain extent.