Events:

In August, 2023, the company released its semi-annual report of 2023. In the first half of 2023, the company achieved revenue of 592 million yuan, an increase of 22.86% over the same period last year; net profit of 58 million yuan, an increase of 12.25% over the same period last year, with a significant increase in performance; and net profit of 35 million yuan, down 2.21% from the same period last year. The income in the second quarter was 350 million yuan, an increase of 21.95% over the same period last year, and the net profit of returning home was 32 million yuan, down 8.57% from the same period last year.

The superalloy business has improved steadily, and the release of production capacity is expected to promote performance growth in the first half of 23 years. The company's high temperature corrosion resistant alloy products achieved revenue of 388 million yuan, an increase of 40.05% over the same period last year, while alloy pipe products achieved revenue of 155 million yuan, a decrease of 14.91% over the same period last year. During the reporting period, the company has a total production capacity of 8000 tons of high temperature corrosion resistant alloys, including 3000 tons of cast superalloys and nickel-based corrosion resistant alloys and 5000 tons of deformed superalloys. With the 12T vacuum induction melting furnace put into production at the beginning of 23, the company's total production capacity of deformed superalloys has increased to 5000 tons, and the release of production capacity is expected to promote the steady growth of the company's superalloy business.

The company continues to invest in R & D to consolidate the core technological advantages.

In the first half of 23, the company invested 29.55 million yuan in R & D, an increase of 31.18% over the same period. In order to develop new products and maintain good market competitiveness, the company continues to increase R & D investment in major products such as superalloy materials, and actively promote the progress of scientific research projects, especially the implementation of one major national science and technology project and three national projects. By the end of the reporting period, the company had 80 R & D personnel, an increase of 11 over the same period last year, and the per capita salary of R & D personnel was 82400 yuan, an increase of 3.39% over the same period last year.

Earnings forecast, valuation and rating

We estimate that the operating income of the company in 2023-2025 is 2.159 billion yuan (the original value in 23-24 is 2.183 million yuan), the net profit of return to the mother is 1.28 yuan 2.41 / 305 million yuan (the original value in 23-24 years is 448 million yuan), the EPS is 0.52, 0.98 and 1.23 yuan per share respectively, and the 3-year CAGR is 47.78%. The current price corresponds to PE 50x/26x/21x. Considering that the company is the core supplier of superalloy and the release of production capacity is expected to promote the growth of the company's performance, with reference to the comparable company's valuation, the company will be given 32 times PE in 2024, corresponding to the target price of 31.24 yuan. Maintain a "buy" rating.

Risk tips: market demand is lower than expected; the risk of uncertain progress and results of product introduction verification; the risk of intensified market competition; the risk of shortage of raw materials.