Performance summary: In the first three quarters of 2024, the company achieved operating income of 0.964 billion yuan (YoY +11.0%), realized net profit of 78.27 million yuan (YoY +14.4%), net profit after deduction of 72.01 million yuan (compared to +30.3%), corresponding basic EPS of 0.11 yuan. Among them, the company 03 achieved revenue of 0.34 billion yuan (+10.1%, month-on-month +1.0%), net profit of 22.33 million yuan (YoY +41.2%, -28.8% month-on-month), net profit of 20.93 million yuan (YoY +38.8%, -29.8% month-on-month), and a basic EPS of 0.03 yuan copper alloy business in a single quarter: the company achieved year-on-year revenue growth in the first three quarters of 2024, mainly driven by the high boom in the downstream power equipment industry Demand for copper alloy thrust interior walls is growing rapidly due to the release of high-voltage electrical contact products and the acceleration of commercial space satellite launch processes. By business, ①) In the field of high-conductivity high-strength copper alloy materials and products, the company focuses on laying out materials and products in the semiconductor industry and generator industry in the US, Europe, etc.; ② in the field of medium- and high-voltage electrical contact materials and products, the company and customers such as Siemens and Schneider have achieved breakthroughs in the application and verification of new technologies and products; ③ in the field of CT and DR ball tube materials and components, deepening business cooperation with industry benchmarks such as Nishishangzi and Fang Ruishi: (4) In terms of international business, the company lays out overseas production capacity to serve customers in foreign markets, and the Thai subsidiary's infrastructure is progressing smoothly.;

The results of improving quality and efficiency have been shown: the company's gross margin/net margin for the first three quarters of 2024 was 23.0%/8.2% (+2.77pcts/+0.35pcts compared to the same period). Mainly thanks to the company's implementation of quality and efficiency management, the results of improving total factor production efficiency were obvious. The gross margin/net margin of the 2024Q3 company was 21.5%/6.8% (2.79pcts/-2.58pcts), respectively. It is estimated that the month-on-month decline in gross margin was mainly due to seasonal fluctuations in the gross margin of high-strength high-conductivity copper alloy materials and products, medium- and high-voltage electrical contact materials and products. It is expected that the gross margin of the above businesses will rise simultaneously in Q4 with the improvement in order delivery volume at the end of the year:

New development and additional projects to help expand production capacity: The company announced that it plans to issue shares with specific targets to raise a total of 0.6 billion yuan, of which: ① It plans to invest 0.2 billion yuan to raise capital for the “liquid rocket engine thrust chamber materials, parts, and components industrialization project (phase 1)”. The project will help the company form a full-process business layout. After completion and delivery, it is expected to achieve an annual output of about 200 tons of forgings, 200 sets of rocket engine injector panels, and 500 sets of rocket engine thrust interior walls and exterior walls. Revenue of 200.57 million yuan; ② It is proposed to invest 0.34 billion yuan to raise capital for the “R&D and industrialization project for electric vacuum materials and components such as 0.03 million sets of medical imaging equipment”. After completion and delivery of the project, it is expected to achieve an annual output of 30,000 sets of CT ball tube components, 15.000 sets of DR ray tube components, 500 sets of linear accelerator components, 3.500 sets of semiconductor product components, and 30.000 sets of VI conductive system components for high voltages, which is expected to be achieved in the year of production Sales revenue of 0.507 billion yuan: ③ The remaining 60 million yuan was used to supplement working capital. This fixed increase project will help the company enhance its core competitiveness, consolidate its position in the industry, and improve the company's long-term profitability:

The core material target for commercial space is benefiting from the acceleration of satellite launches: According to our recently released “Commercial Space In-Depth Report: Sea of Stars,” SpaceX's “Starlink” program is currently accelerating the launch of low-orbit satellites into orbit and is at the forefront of the world. The field of low-orbit constellation satellite communications is setting off an unprecedented space “orbital movement”, and there is no time to delay in “grabbing frequency and orbit” for domestic satellites. 2024H1 was launched a total of 126 times worldwide, including 73 by the US and 30 by China. Against the backdrop of accelerated satellite launches and rapid expansion in the customs market, a sharp increase in demand for liquid rocket engines has boosted demand for thrust interior walls and components. Liquid rocket engine thrust interior wall materials must have good resistance to high temperatures, low cycle fatigue and thermal conductivity. The company continues to provide copper alloy thrust interior wall products with excellent performance for commercial space customers in China. It has helped key customers such as Blue Arrow Aerospace, Kyushu Cloud Arrow, and Interstellar Honor to complete many tests, launches, and recycling, and achieve success. At present, the company's chromium-zirconium-copper thrust interior wall products have been industrialized. In the future, it will further expand production capacity and build production capacity for copper-chromium materials, accelerate domestic substitution, and consolidate its leading position in the industry;

Investment advice: The company is a leading copper-chromium-based alloy R&D and manufacturing platform enterprise in China. Its business development focuses on domestic substitution and overseas expansion. It provides non-standard personalized R&D services to customers in various downstream segments. It has strong growth potential, and is expected to benefit from the rapid development of emerging industries such as aviation and artificial intelligence in the future. We expect the company to achieve operating income of 1.43/1.74/2.14 billion yuan in 2024-2026, up 20.8%/21.7%/23.1% year on year, and realized net profit of 0.127/0.171/0.229 billion yuan respectively, up 29.1%/34.7%/33.7% year on year, corresponding to PE52X/38X/29X. Maintain a “buy” rating.

Risk warning: Product prices fluctuate greatly, project progress falls short of expectations, terminal demand falls short of expectations, etc.