Report summary:

Production capacity for stealth materials is expected to increase further. The company is mainly engaged in stealth coating materials and structural stealth materials, which are mainly used for stealth of major defense weapons and equipment such as aircraft, main battle tanks, ships, missiles, etc., camouflage of important ground military targets, and surface protection of various equipment components. The construction of the fund-raising project is being accelerated. The company adopts the principle of construction and investment, and related plant and other infrastructure will gradually be put into use according to the actual construction situation. The production capacity of stealth materials is expected to increase further with the gradual implementation of fund-raising projects.

Ceramic composites have a large market space. Huaqin Technology and Academician Dong Shaoming and his team jointly funded the establishment of Shanghai Ruihuasheng New Materials Co., Ltd. The company invested 0.309 billion yuan with its own capital, accounting for 51.50% of the registered capital of the joint venture. Shanghai Ruihuasheng mainly implements research and development and industrialization projects for ceramic-based composites for aero engines and their structural components. With their excellent properties, ceramic-based composites were successfully applied to the M88-2 engine (supporting the French Rafale fighter) nozzle external adjustment plate and the F100 engine (supporting the American F-15/F-16 fighter) adjustment plate. Since then, the US, Europe, Japan, etc. have continued to increase investment in ceramic-based composite manufacturing technology. Ceramic-based composites have now been successfully applied to hot end structural components such as F110-GE-129 engine tail nozzles, CFM56-5B engine tail nozzles, LEAP-X engine turbine outer rings, GE9x engine turbine outer rings, guide blades, and combustion chamber flame barrels. The GE9X engine is currently the largest new-generation commercial aero engine in the world. The combustion chamber and high-pressure turbine part are made of CMC materials. The weight of the GE9X engine is reduced by about 1/3 compared to using superalloy, reducing air conditioning consumption by 15%, and the engine's thrust, thrust-to-weight ratio, and fuel thermal efficiency are all significantly improved.

Acoustic metamaterials are progressing steadily. The acoustic metastructural materials developed by Huaqin Optoacoustics, a holding subsidiary, have gradually entered the engineering stage of actual application in the fields of rail transit, energy and electricity, aerospace, nuclear industry, building acoustics, and underwater sound stealth. The company actively continues to expand its business in the fields of acoustic laboratories, power plant noise control, energy and chemicals, wind tunnel laboratories, building sound absorption, rail transit, etc., and continues to carry out research on acoustic meta-structural materials such as aviation, underwater vehicles, high-speed trains, etc., and provides customers with laser ultrasonic nondestructive testing equipment and services.

Profit forecast and investment rating: The estimated revenue for 2024-2026 is 1.133/1.473/2.062 billion yuan, respectively, and net profit to mother is 0.443/0.551/0.77 billion yuan, respectively, covering the “buy” rating for the first time.

Risk warning: sales of stealth materials fell short of expectations; mass production of ceramic composite parts fell short of expectations;