TIANGONG INTERNATIONAL(00826.HK):STRONG GROWTH MOMENTUM; LIKELY TO SEE DAVIS DOUBLE PLAY IN 2H23
TIANGONG INTERNATIONAL(00826.HK):STRONG GROWTH MOMENTUM; LIKELY TO SEE DAVIS DOUBLE PLAY IN 2H23
GM edged down due to rising product prices. In 1H23, unit selling prices of DS, HSS, titanium alloy, and precision cutting tools rose about 1.7ppt, 8.9ppt, 125.0ppt, and 34.0% YoY to Rmb17,000/t, 56,000/t, 192,000/t, and Rmb4.8/unit. As rising raw material prices and weak domestic demand weighed on cost pass-through, GM of the firm's HSS, DS, and precision cutting tools businesses fell 6.7ppt, 5.1ppt, and 3.9ppt YoY to 17.6%, 16.4%, and 24.6% in 1H23. GM of titanium alloys increased 11ppt YoY to 31.2% in 1H23. We attribute the sharp increase in GM of titanium alloys to product mix adjustment and higher proportion of high- value-added computer, communication, and consumer electronics (3C) products.H23 results slightly miss our expectations
H23業績略低於我們的預期
Tiangong International announced its 1H23 results: Revenue fell 6.5% YoY and grew 4.2% HoH to Rmb2.50bn, and attributable net profit dropped 25.9% YoY and grew 3.7% HoH to Rmb219mn, slightly missing our expectations. However, its earnings still show resilience.
天工國際公佈了其23年上半年業績：收入同比下降6.5％，增長4.2％，至人民幣25.0億元；應占淨利潤同比下降25.9％，增長3.7％，至2.19億元人民幣，略低於我們的預期。但是，其收益仍顯示出彈性。
Overall product sales volume declined due to sluggish demand; titanium alloy sales volume increased despite headwinds. In 1H23, the firm's sales volume of die steel (DS), high-speed steel (HSS), and precision cutting tools dropped 18.7%, 34.1%, and 20.3% YoY to 663mn units, 68mn units, and 94mn units due to lackluster demand from domestic manufacturing industries. Sales volume of titanium alloy increased 24.7% YoY to 2,400t in 1H23.
由於需求疲軟，整體產品銷量下降；儘管存在不利因素，但鈦合金的銷量仍有所增加。由於國內製造業需求疲軟，該公司模具鋼（DS）、高速鋼（HSS）和精密切削刀具的銷量同比下降18.7％、34.1％和20.3％，至6.63億輛、6,800萬輛和9400萬輛。23年上半年鈦合金銷量同比增長24.7％，至2400噸。
GM edged down due to rising product prices. In 1H23, unit selling prices of DS, HSS, titanium alloy, and precision cutting tools rose about 1.7ppt, 8.9ppt, 125.0ppt, and 34.0% YoY to Rmb17,000/t, 56,000/t, 192,000/t, and Rmb4.8/unit. As rising raw material prices and weak domestic demand weighed on cost pass-through, GM of the firm's HSS, DS, and precision cutting tools businesses fell 6.7ppt, 5.1ppt, and 3.9ppt YoY to 17.6%, 16.4%, and 24.6% in 1H23. GM of titanium alloys increased 11ppt YoY to 31.2% in 1H23. We attribute the sharp increase in GM of titanium alloys to product mix adjustment and higher proportion of high- value-added computer, communication, and consumer electronics (3C) products.
由於產品價格上漲，通用汽車小幅下跌。23年上半年，DS、HSS、鈦合金和精密切削刀具的銷售價格同比上漲約1.7個百分點、8.9個百分點、125.0ppt和34.0％，至人民幣17,000元/噸、5.6萬/噸、19.2萬/噸和4.8元人民幣。由於原材料價格上漲和國內需求疲軟打壓了成本轉移，該公司HSS、DS和精密切削刀具業務的通用汽車在23年上半年同比下降6.7個百分點、5.1個百分點和3.9個百分點，至17.6％、16.4％和24.6％。鈦合金通用汽車在23年上半年同比增長11個百分點至31.2％。我們將鈦合金轉基因的急劇增加歸因於產品組合的調整以及高附加值計算機、通信和消費電子（3C）產品比例的增加。
Operating cash flow improved and FX gains surged. The firm's operating cash flow rose Rmb360mn YoY to Rmb154mn in 1H23. Its FX gains rose Rmb27mn YoY to Rmb66mn in 1H23, mainly due to appreciation of the US dollar and the euro.
運營現金流改善，外匯收益激增。該公司的運營現金流在23年上半年同比增長3.6億元人民幣，至1.54億元人民幣。其外匯收益在23年上半年同比增長2,700萬元人民幣，至6,600萬元人民幣，這主要是由於美元和歐元升值。
Trends to watch
值得關注的趨勢
Premiumization strategy well on track; strong endogenous growth momentum. The firm continues to optimize its product mix structure amid its premiumization strategy. Despite weak domestic demand, the firm's sales volume of powder metallurgical products rose 200t YoY to 556t in 1H23. We expect its full-year sales volume to reach 1,500t.
高端化戰略步入正軌；強勁的內生增長勢頭。在高端化戰略中，該公司繼續優化其產品組合結構。儘管國內需求疲軟，但該公司粉末冶金產品的銷量在23年上半年同比增長200噸，至556噸。我們預計其全年銷量將達到1500噸。
As titanium alloy gains greater popularity in fields such as 3C, eyeglasses, 3D printers, and aerospace, and we expect sales volume of the firm's titanium alloy products to increase. We believe the firm's titanium alloy production capacity will reach 13,000t after its 3,000t/yr project commences operation in 2024. We also expect its product mix of titanium alloy to continue to improve.
隨着鈦合金在3C、眼鏡、3D 打印機和航空航天等領域越來越受歡迎，我們預計該公司鈦合金產品的銷量將增加。我們認爲，該公司的鈦合金產能將在2024年開始運營後達到13,000噸。我們還預計其鈦合金產品組合將繼續改善。
The firm is strengthening its presence in the field of high-end cutting tools, and the construction of production lines for cemented carbide cutting tools and powder metallurgy tap is on track. The performance of its powder metallurgy taps and drill bits is improving. The firm's 7,000t/yr high-speed forging machine construction project has been officially completed, laying a solid foundation for its development of the integrated DS business. We expect the project to generate considerable profit in 2024.
該公司正在加強其在高端切削刀具領域的影響力，硬質合金刀具和粉末冶金絲錐生產線的建設已步入正軌。其粉末冶金絲錐和鑽頭的性能正在改善。該公司年產7000噸的高速鍛壓機建造項目已正式完工，爲其發展綜合DS業務奠定了堅實的基礎。我們預計該項目將在2024年產生可觀的利潤。
Expecting recovery; earnings and valuation to improve in 2H23.
預計復甦；收益和估值將在23年下半年有所改善。
Considering that the destocking cycle of domestic manufacturing industries is near an end, we expect downstream demand to recover in 2H23. As sales volume of its high-end products ramps up, we expect the firm to see significant earnings recovery and Davis Double Play in 2H23.
考慮到國內製造業的去庫存週期已接近尾聲，我們預計下游需求將在23年下半年恢復。隨着其高端產品銷量的增加，我們預計該公司將在23年下半年實現收益大幅復甦，Davis Double Play將出現大幅回升。
Financials and valuation
財務和估值
As the recovery in downstream demand was slower than we expected, we lower our 2023 attributable net profit forecast by 23.9% to Rmb693mn. We raise our 2024 attributable net profit forecast by 1.7% to Rmb1.18bn due to the sales ramp-up of high-end products. The stock is trading at 9.1x 2023e and 5.1x 2024e P/E. We maintain an OUTPERFORM rating and our TP of HK$4.21, implying 16.8x 2023e and 9.8x 2024e P/E with 67% upside.
由於下游需求的復甦速度低於我們的預期，我們將2023年應占淨利潤預期下調了23.9％，至6.93億元人民幣。由於高端產品的銷售增長，我們將2024年的應占淨利潤預期上調了1.7％，至11.8億元人民幣。該股的交易價格爲2023年每股9.1倍和2024年市盈率的5.1倍。我們維持跑贏大盤的評級，目標價爲4.21港元，這意味着2023年爲16.8倍，2024年市盈率爲9.8倍，上行空間爲67％。
Risks
風險
Alloy material prices plunge; macroeconomic growth slows.
合金材料價格暴跌；宏觀經濟增長放緩。
譯文內容由第三人軟體翻譯。