Description of the event

1) The company released its 2024 three-quarter report. The first three quarters achieved revenue of 0.964 billion yuan, an increase of 10.98% over the previous year; realized net profit of 78.2682 million yuan, an increase of 14.36% over the previous year; and basic earnings per share were 0.11 yuan.

2) The total amount of capital raised by the company to issue A shares to specific targets shall not exceed 0.6 billion yuan.

Incident reviews

Revenue and profit both increased year over year. The company actively explores the international market, export revenue has increased markedly, and the sales structure has been continuously optimized. Looking at a single quarter, the company achieved revenue of 0.34 billion yuan in Q3, up 10.08% year on year and 1.04% month on month; realized net profit of 22.3325 million yuan, up 41.30% year on year and down 28.82% month on month; basic earnings per share were 0.03 yuan.

Raise no more than 0.6 billion yuan in fixed capital to accelerate production capacity construction in the high-end manufacturing sector. With the rapid development of technology industries such as electronics, electricity, aerospace, rail transit, and semiconductors in China, the demand for new materials in high-end manufacturing far exceeds the past, and the company's production capacity can no longer meet the needs of the future rapid growth of the downstream market.

The capital raised this time is mainly used for the industrialization project for liquid rocket engine thrust chamber materials, parts, and components (phase 1, with a capital raised of 0.2 billion yuan), and the R&D and industrialization project for electric vacuum materials and components such as medical imaging equipment with an annual output of 0.03 million sets (proposed to raise 0.34 billion yuan). The implementation of the project will further enhance the company's R&D technology level and enhance the company's competitiveness.

Investment in R&D continues to be increased, and new industries such as commercial aerospace are growing rapidly. The company invested in key R&D projects. Q3 invested 18.22 million yuan in R&D expenses, accounting for 5.35% of revenue, an increase of 0.41 pct over the same period last year. At present, the company has helped commercial space customers such as Blue Rocket Aerospace, Kyushu Cloud Arrow, and Star Glory to complete many successful tests, launches, and recycling. Copper alloy products have been successfully applied to various rocket engine models such as “Dragon Cloud” and “Magpie”. With frequent space launch activities, the demand for thrust interior walls is also increasing. With the release of production capacity for the company's new construction projects, performance is expected to continue to grow.

Profit forecasting and valuation

Net profit for 2024-2026 is expected to be 0.12/0.151/0.205 billion yuan, EPS 0.16/ 0.21/ 0.28, respectively, corresponding to the company's closing price of 9.18 yuan on October 29, and PE of 55.7/44.1/32.5 for 2024-2026, respectively, maintaining a “buy-B” rating.

Risk warning

The risk of additional production capacity cannot be absorbed; the risk of uncertainty in developing a new product market; the risk of fluctuating raw material prices and hedging management.