Three-quarter report results: The company released the 2024 three-quarter report, and achieved revenue of 0.311 billion yuan (+15.7% YoY); net profit to mother of 0.056 billion yuan (-4.7% YoY); deducted non-net profit of 0.052 billion yuan (-3.7% YoY).

Among them, Q3 achieved revenue of 0.106 billion yuan (+19.1% YoY, -9.3% month-on-month); net profit to mother of 0.02 billion yuan (-7.2% YoY, -1.4% month-on-month).

Revenue has been steadily realized, waiting for production capacity to rise and profits to pick up. On the revenue side, we achieved revenue of 0.311 billion yuan in the first three quarters of 2024, +15.7% year-on-year, and achieved revenue of 0.106 billion yuan in 24Q3, or +19.1% year-on-year. We believe it is mainly due to the steady implementation of carbonyl iron powder production and the incremental demand for alloy powder. On the profit side, 24Q3 gross profit margin was 35.29%, -8.14pct yoy, +0.74pct month-on-month; net profit margin 18.32%, -4.97pct yoy, +1.24pct month-on-month. Profitability declined year-on-year. We believe that the main reason is that costs have risen due to the consolidation of fund-raising projects, and we are waiting for production to continue to rise; at the same time, the company's profitability has improved month-on-month.

During the 24-year production capacity planting period, new and old process projects progressed simultaneously. The year 24 is a critical period for planting the company's production capacity. At the Jiangxi base, the first phase of the “6,000 tons of carbonyl iron powder and other products” has been converted, and production capacity is in the climbing phase, waiting for the production to gradually increase; at the Ningxia base, the first phase of the “0.1 million tons of metal soft magnetic micro-nano powder project” is under construction, and it is expected that equipment will be commissioned and put into production next year.

Profit forecast and rating: We expect the company's net profit to be 0.084/0.118/0.181 billion yuan in 2024-2026, with year-on-year growth rates of 5.47%/40.39%/53.39%, respectively. The PE corresponding to the current stock price is 34/24/16 times, respectively. As a leader in domestic carbonyl iron powder, the company's fund-raising projects are expected to contribute to performance growth, reduce costs and open up growth space, and folding screen hinges will open up a new demand cycle for alloy powder. Maintain a “buy” rating.

Risk warning: risk of demand fluctuations; risk of project construction falling short of expectations; risk of fluctuations in raw materials; risk of new business development falling short of expectations.