occurrences
On August 30, Western Superconductor released its 2024 semi-annual report. With 2024H1, the company achieved revenue of 2.02 billion yuan, a year-on-year decrease of 4%; net profit to mother was 0.348 billion yuan, a year-on-year decrease of 17%.
reviews
1. In the 2024Q2 quarter, the company's revenue and profitability recovered month-on-month, and net profit to mother increased 115% month-on-month. With 2024H1, the company's revenue was 2.02 billion, down 4% year on year, and net profit to mother was 0.348 billion yuan, down 17% year on year. In the 2024Q2 quarter, the company's revenue was 1.227 billion, up 3% year on year, up 55% month on month, gross sales margin was 34.34%, up 5.31 pcts year on year, up 5.88 pcts year on year. In the 2024Q2 quarter, the company's revenue and profitability recovered month-on-month, achieving net profit of 0.238 billion yuan, up 12% year on year and 115% month on month.
2. Increase investment in R&D, and increase the cost ratio over the same period last year. The company's high-end titanium alloys and high-performance superalloy materials are mainly used in aviation and other fields. Through participation in model projects, R&D drives sales.
2024H1, the company continued to increase R&D investment in major product areas. R&D expenses were 0.175 billion yuan, an increase of 39% over the previous year. 2024H1, the company's sales, management, R&D and financial expense ratios were 0.65%, 3.43%, 8.88%, and 0.90%, respectively, +0.09pcts, +0.09pcts, +0.09pcts, +0.09pcts, and +0.09pcts, respectively. The company's four-fee rate was 13.86%, an increase of 3.17pcts over the same period last year.
3. The superconducting business maintained a relatively rapid growth rate, and titanium alloy sales improved month-on-month. 2024H1, the company's superconducting products achieved revenue of 0.482 billion, a year-on-year increase of 19.95%; high-end titanium alloy materials achieved revenue of 1.284 billion, a year-on-year decrease of 4.07%; and high-performance superalloy materials achieved revenue of 0.156 billion yuan, a year-on-year decrease of 44.67%. In terms of superconductivity, external orders for 2024H1's superconducting business continued to increase. With the completion of the high-performance superconducting wire industrialization project, the company's superconducting wire production capacity was greatly increased; in terms of titanium alloys, 2024H1 overcame the weakening market demand and successfully completed the delivery of various products. Sales continued to improve month-on-month. Titanium alloy development tasks in the marine, military, nuclear industry and other fields are progressing smoothly. The promotion and application of high-end titanium in helicopters, commercial aircraft, commercial aviation engines, gas turbines, etc. has made significant progress; in terms of high temperature alloys, high temperature alloys phase II The entire production line has been completed, trial production has started, and an independent design and construction of a high temperature alloy return material treatment line has been put into trial production.
4. Contract liabilities have increased significantly since the beginning of the year, and demand for superconducting products is strong. As of the end of 2024H1, the company's contract debt amount was 0.292 billion yuan, an increase of 106.46% over the beginning of the year, mainly due to the company's receipt of advance payments for superconducting products. The sharp increase in contract liabilities reflects strong downstream demand for the company's superconducting products.
5. We expect the company's net profit to be 8.42, 10.58, and 1,280 million yuan respectively for 2024-2026, corresponding to the current PE share price, which is 28, 22, and 18 times, respectively, to maintain a “buy” rating.
Risk warning
The company's product demand and market expansion fell short of expectations; product price reductions exceeded market expectations; raw material price increases exceeded market expectations, etc.