The company released its 2024 semi-annual report. 2024H1 achieved revenue of 20.3 billion yuan, +17.1% year on year; realized net profit of 0.43 billion yuan, +100.4% year on year; net profit of 0.31 billion yuan after deducting non-return net profit of 0.31 billion yuan, +55.9% year on year. Looking at a single quarter, 2024Q2 achieved revenue of 11 billion yuan, +11.6% year over month; realized net profit of 0.31 billion yuan, +155.2% year over year, +149.3% month on month; net profit without return to mother of 0.194 billion yuan, +74.4% year on year and +68.7% month on month.

2024H1 production and sales increased significantly year-on-year

In the first half of 2024, the company completed the warehousing output of cold rolled products of 1.646 million tons, an increase of 41.1% year on year; sales of 1.605 million tons, an increase of 37.2% year on year. Among them, 300 series cold-rolled stainless steel coil output was 1.302 million tons, up 29.2% year on year, and sales volume was 1.284 million tons, up 26.3% year on year; 400 series cold rolled stainless steel coil output was 0.259 million tons, up 64.7% year on year, and sales volume was 0.237 million tons, up 57.7% year on year.

The price of 2024H1 products fell year on year, and gross profit increased year on year

The average sales price of the company's 300 series products in the first half of 2024 was 13,706 yuan/ton, a year-on-year decrease of 10.9%. The average sales price of 400 series products was 7,301 yuan/ton, a year-on-year decrease of 5.3%. 2024H1, the company's gross sales margin in the first half of the year was 5.81%, +1.06pct year on year. Looking at a single quarter, the company's gross margin reached 6.67% in 24Q2, +1.88pct month-on-month and +1.93pct year-on-year.

The company's various projects are progressing steadily, and the new materials business diversifies and the “annual processing 0.35 million ton wide precision stainless steel strip technology transformation project” in Yongjin, Guangdong, and the “0.195 million ton ultra-thin precision stainless steel strip processing project per year” in Yongjin, Zhejiang have released production capacity, providing strong support for performance growth. At the same time, Vietnam's Yongjin production capacity utilization rate has been further improved, further enhancing the company's overall profitability. In addition, in terms of new materials, a special case material project with an annual output of 0.225 million tons of cylindrical batteries has begun trial production. The titanium alloy new material project company with an annual output of 0.06 million tons is progressing steadily, laying out new business segments, and focusing on developing new materials and overseas business. This is also a reflection of the company's integrated industrial chain to implement an integrated two-wing and diversified development strategy.

Profit forecasting

The company is a leader in the precision cold-rolled stainless steel strip industry. While continuing to consolidate its main business, the business is blossoming more. We are optimistic that new businesses such as pre-nickel plating will bring significant performance increases to the company in the future, and the company's performance is expected to be released at an accelerated pace in the next few years. Due to the significant increase in the company's gross margin, we raised the company's profit forecast. We expect the company's net profit to reach 0.73/0.84/0.96 billion yuan respectively in 2024-2026, +61.4%/14.8%/14.2% year-on-year, maintaining the company's “buy” rating.

Risk warning

Demand for stainless steel fell short of expectations, battery case capacity construction fell short of expectations, and 4680 batteries fell short of expectations.