Company and Industry Summary Company: Tian Gong International Key Industry: Titanium Alloy and Powder Steel Core Insights and Arguments - **Titanium Alloy Demand Surge**: The company has signed a contract with Apple for approximately 4,000 tons of titanium alloy, representing a fourfold increase compared to 2025. Total titanium alloy sales are expected to reach 5,000-6,000 tons in 2026, driven by demand from smartphone manufacturers like Apple, Samsung, Xiaomi, and Huawei [2][3]. - **Profit Forecast for Titanium Alloy Business**: Revenue from the titanium alloy business is projected to reach 1 billion yuan in 2026, benefiting from a decrease in sponge titanium prices to 40,000 yuan per ton. The company has not adjusted its supply prices, leading to an expected net profit margin of 45%, corresponding to a net profit of approximately 450 million yuan [2][3]. - **Strong Growth in Powder Steel Business**: The sales target for powder steel in 2025 is set at 1,500 tons, with a goal of 3,000 tons in 2026. The growth is primarily driven by nuclear fusion-related projects, including a tender for 1,100 tons of boron steel and deactivation steel. The nuclear fusion market presents significant growth potential [2][5]. - **Overall Profitability**: The company's core business, excluding titanium alloy, is expected to generate a profit of 350-400 million yuan in 2025, reflecting a year-on-year growth of 10%-15%. Including the titanium alloy business, total profitability is anticipated to exceed 700 million yuan. The acquisition of a 3D printing titanium powder company will further enhance revenue and profit [2][6]. - **Commercial Application of Nuclear Fusion Materials**: Materials used in nuclear fusion reactors will become consumables that need regular replacement, creating sustained demand and market value growth for material companies. The company is collaborating with research institutions and expects to secure orders by April 2026 [2][7]. - **Development in Integrated Die-Casting for New Energy Vehicles**: The company is actively developing integrated die-casting in the new energy vehicle sector, collaborating with Tesla's mold manufacturer and other domestic automakers. The performance of powder steel molds has improved significantly, with cost reductions expected to yield substantial market progress in 2026 [2][4][8]. Additional Important Insights - **Future Growth Expectations for Powder Steel**: The company is optimistic about its powder steel business, forecasting production of 1,800 tons in 2026 at a price of approximately 100,000 yuan per ton, with a net profit margin of around 35%. This could contribute an additional 70-80 million yuan in profit [4][9]. - **Valuation Compared to US Peers**: Compared to US peers like Carpenter Technology, which has a PE ratio of 40 despite sluggish growth, the company is currently undervalued. It is the leading global producer of tool steel and the only domestic producer with a production and sales volume exceeding 1,000 tons [2][11]. - **Overall Investment Value Assessment**: The company is seen as a significant investment opportunity due to its short-term contributions from the titanium alloy business and long-term growth potential from powder steel. The current low valuation, combined with market catalysts, makes it a noteworthy target for investment in the machinery sector [2][12].

Core Insights - Integrated die-casting is recognized as a disruptive manufacturing process in the rapidly growing global electric vehicle and smart equipment industries, becoming a key technological battleground for future competition [1] - Companies like Tesla have pioneered large-scale integrated die-casting production in North America, while domestic players like CATL are collaborating with major automakers on projects that combine CTC structure and integrated die-casting, indicating a systematic layout with potential market value in the hundreds of billions [1] Group 1 - Tiangong International has leveraged over 40 years of metallurgical technology to fully develop core products related to "built-in waterway near-net forming," achieving technology implementation and product mass production [4] - The company has successfully applied its series of products, including gating sleeves and barrels, to several well-known automotive parts suppliers and OEMs, establishing a solid foundation for future large-scale production [4][7] Group 2 - Tiangong International has made comprehensive breakthroughs in core component technology, significantly enhancing mold system performance, which includes improvements in gating sleeves, punches, barrels, and diverging cones [7] - The market for high-performance near-net forming components is expected to reach a "trillion-level" scale in the next five years, with companies possessing material research and system development capabilities becoming key players in the new industrial chain [7] Group 3 - The company will continue to focus on upgrading powder metallurgy materials and tackling complex structural near-net forming technologies, promoting the localization and high-end development of core components in high-end equipment manufacturing [8] - Tiangong International aims to strengthen collaboration with leading domestic and international die-casting and automotive companies to drive larger-scale applications of high-performance mold core components in cutting-edge fields like electric vehicles and smart equipment [8]

Core Viewpoint - Tiangong International is experiencing significant growth in its revenue and profit margins, driven by increased demand for its products in the aerospace and defense sectors [1] Financial Performance - The company reported a revenue increase of 25% year-over-year, reaching 1.5 billion [1] - Net profit surged by 30%, amounting to 300 million [1] - Gross margin improved to 40%, up from 35% in the previous year [1] Market Demand - There is a notable rise in demand for aerospace components, attributed to the expansion of the global aerospace industry [1] - The defense sector is also contributing to growth, with increased government spending on military technology [1] Strategic Initiatives - Tiangong International is investing in R&D to enhance product offerings and maintain competitive advantage [1] - The company plans to expand its production capacity by 20% over the next two years to meet growing demand [1]

Macro Strategy - The core view indicates that actual interest rates remain the key anchor for gold prices, with fluctuations in monetary policy impacting market sentiment and gold's value [1][6] - In October, gold prices experienced a "rise then fall" pattern, influenced by geopolitical tensions and economic data, leading to a 5.27% increase in the Shanghai gold futures by the end of the month [1][6] - The outlook for November suggests that gold prices will be driven by geopolitical situations, trade negotiations, and macroeconomic policies, with expectations of continued high volatility [1][6] Fixed Income - The report on Qizhong Convertible Bonds anticipates a listing price between 126.64 and 140.59 CNY, with a subscription rate of 0.0028% [2][7] - The bond has a total issuance scale of 850 million CNY, with proceeds allocated for advanced packaging and testing projects [7][8] Industry Analysis - The food and beverage industry report highlights a 5.5% decline in total revenue and a 6.7% drop in net profit for the liquor sector in the first three quarters of 2025, with a more pronounced 18.3% revenue decline in Q3 [3][10] - The report notes that the recovery of consumption scenarios is slow, particularly in business and personal dining contexts, leading to sustained pressure on demand for high-end and mid-range liquor [3][10] - Investment recommendations suggest focusing on companies that are likely to see early signs of recovery and have strong growth potential, such as Luzhou Laojiao and Shanxi Fenjiu, while also considering companies with solid governance and dividend yields [4][11] Company Recommendations - Tiangong International is highlighted for its potential growth in titanium alloy production, with projected revenues of 5.2 billion, 6.1 billion, and 7 billion CNY from 2025 to 2027, reflecting growth rates of 8%, 16%, and 14% respectively [5][11] - The company is positioned well in the consumer electronics sector and is expanding into new materials for robotics and nuclear fusion applications, which are expected to drive future growth [5][11]

Core Viewpoint - Dongwu Securities projects Tian Gong International (00826.HK) to achieve revenues of 5.2 billion, 6.1 billion, and 7.0 billion CNY from 2025 to 2027, with corresponding growth rates of 8%, 16%, and 14% respectively. The net profit attributable to shareholders is expected to be 430 million, 610 million, and 810 million CNY, with growth rates of 20%, 41%, and 35% respectively, leading to price-to-earnings ratios of 17, 12, and 9 times. The firm is optimistic about the company's titanium alloy expansion in consumer electronics and its forward-looking layout in new materials, initiating coverage with a "Buy" rating [1][2]. Group 1: Financial Projections - Revenue projections for Tian Gong International from 2025 to 2027 are 5.2 billion, 6.1 billion, and 7.0 billion CNY, with growth rates of 8%, 16%, and 14% respectively [1]. - Expected net profit attributable to shareholders for the same period is 430 million, 610 million, and 810 million CNY, with growth rates of 20%, 41%, and 35% respectively [1]. - Corresponding price-to-earnings ratios are projected to be 17, 12, and 9 times for the years 2025, 2026, and 2027 [1]. Group 2: Market Ratings - The stock has received a "Buy" rating from four investment firms in the last 90 days, with a target average price of 3.7 HKD [1]. - Specific ratings from various firms include: - Huayuan Securities: Buy [1] - Aoyishangguo: Buy with a target price of 4.38 HKD [1] - Xingzheng International: Upgrade [1] - CICC: Outperform with a target price of 3.01 HKD [1] - Northeast Securities: Buy [1] Group 3: Company and Industry Metrics - Tian Gong International has a market capitalization of 7.848 billion HKD, ranking first in the steel industry [2]. - Key performance indicators include: - Return on Equity (ROE): 5.27%, compared to the industry average of -39.13%, ranking 3rd [2]. - Net profit margin: 9.33%, leading the industry average of -15.34%, ranking 1st [2]. - Gross margin: 18.95%, second to the industry average of 1.59% [2]. - Debt ratio: 43.31%, significantly lower than the industry average of 73.15%, ranking 3rd [2].

Group 1 - The core viewpoint of the report is that Tian Gong International (00826) is expected to see revenue growth from 5.2 billion to 7 billion yuan from 2025 to 2027, with corresponding growth rates of 8%, 16%, and 14% [1] - The net profit attributable to the parent company is projected to increase from 430 million to 810 million yuan during the same period, with growth rates of 20%, 41%, and 35% [1] - The report assigns a "buy" rating to the company, highlighting its potential in titanium alloy applications in consumer electronics and its forward-looking layout in new materials [1] Group 2 - The company is developing high-nitrogen steel for humanoid robot screw materials and has initiated cooperation with domestic enterprises [1] - High-nitrogen steel is recognized for its high performance and low cost, making it an ideal material for manufacturing planetary roller screws [1] - The company has overcome foreign technical barriers by utilizing unique domestic smelting technology to control nitrogen content and improve purity in high-nitrogen alloy materials [1] Group 3 - Tian Gong International is also focusing on specialized materials for nuclear fusion core components, specifically boron steel and RAFM steel, with boron steel already achieving small-scale trial production [2] - The blanket is a core component of magnetic confinement fusion devices, requiring excellent radiation swelling resistance, high-temperature strength, thermal conductivity, and inherent low activation properties [2] - The company has successfully developed core technology for high-boron steel (304B7) used in neutron shielding for nuclear fusion devices and is accelerating the application development of advanced low-activation steel (RAFM steel) [2]

Group 1 - The core viewpoint of the report is that Dongwu Securities has initiated coverage on Tiangong International (00826) with a "Buy" rating, forecasting revenue growth from 5.2 billion to 7 billion yuan from 2025 to 2027, with corresponding growth rates of 8%, 16%, and 14% [1] - The projected net profit attributable to the parent company is expected to increase from 430 million to 810 million yuan during the same period, with growth rates of 20%, 41%, and 35% [1] - The price-to-earnings (PE) ratios are forecasted to be 17, 12, and 9 times for the years 2025, 2026, and 2027 respectively [1] Group 2 - The company is focusing on high-nitrogen steel for humanoid robot screw materials and has begun collaborations with domestic enterprises, overcoming foreign technical barriers with unique domestic smelting techniques [1] - High-nitrogen steel is recognized for its high performance and low cost, making it an ideal material for manufacturing planetary roller screws, with advantages including high strength, toughness, corrosion resistance, wear resistance, and fatigue resistance [1] - The company has successfully developed high-nitrogen steel products suitable for planetary roller screw production in collaboration with Runfu Power and Heng'erda, with production expected to commence in July 2025 [1] Group 3 - Tiangong International is also developing specialized materials for nuclear fusion core components, including boron steel and RAFM steel, with boron steel already achieving small-scale trial production [2] - The blanket is a core component of magnetic confinement fusion devices, requiring excellent radiation swelling resistance, high-temperature strength, thermal conductivity, and inherent low activation properties [2] - The company has successfully tackled the core technology for neutron shielding new materials, specifically high-boron steel (304B7), and is accelerating the application development of advanced low-activation steel (RAFM steel) for nuclear fusion key structural materials [2]

股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 | | | 致：香港交易及結算所有限公司 公司名稱: 天工國際有限公司 呈交日期: 2025年11月6日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 | 不適用 | | 於香港聯交所上市 (註1) | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 00826 | 說明 | | | | | | | | | | 法定/註冊股份數目 | | | 面值 | | 法定/註冊股本 | | | 上月底結存 | | | 4,000,000,000 | USD | | 0.0025 USD | | 10,000,000 | | 增加 / 減少 (-) | | | | | | USD | | | | 本月底結存 | | | 4,000,000,000 | USD | | 0.0025 USD | | 10,000,000 | 本月底法定/註冊股本總額： USD 10,000,000 FF301 第 1 頁 共 1 ...

Group 1 - Tian Gong International (00826.HK) saw a nearly 7% increase during trading, with a current rise of 5.54% to HKD 3.05 [1] - The trading volume reached HKD 88.48 million [1]

Core Viewpoint - Tian Gong International (00826) has seen a significant stock price increase, attributed to its strategic positioning in the emerging nuclear fusion energy sector and advancements in powder metallurgy technology [1] Group 1: Stock Performance - The stock price of Tian Gong International rose nearly 7% during trading, with a current increase of 5.54%, reaching HKD 3.05, and a trading volume of HKD 88.48 million [1] Group 2: Industry Insights - The Central Committee of the Communist Party of China has proposed a forward-looking layout for future industries, emphasizing nuclear fusion energy as a new economic growth point [1] - Powder metallurgy technology is identified as a foundational capability platform for Tian Gong International to enter the strategic new materials and high-end manufacturing sectors, potentially leading to both performance and valuation improvements [1] Group 3: Technological Advancements - Nuclear fusion structural and functional materials require high resistance to temperature and radiation, relying on powder metallurgy systems for production [1] - As global nuclear fusion technology accelerates towards commercialization, the company is positioned to become a core node in the supply chain, with growth potential as the industry expands [1] - The blanket is a core component of the magnetic confinement fusion device Tokamak, necessitating properties such as radiation swelling resistance, high-temperature strength, thermal conductivity, and inherent low activation [1] - RAFM steel is recognized as the most mature and mainstream candidate structural material for blankets, while boron steel is noted for its high neutron absorption capacity and sufficient mechanical properties [1] - The company has successfully developed core technology for a new neutron shielding material, high boron steel (304B7), for nuclear fusion devices and has achieved small batch production [1] - The company is accelerating the application development of advanced low-activation steel (RAFM steel) for nuclear fusion key structural materials [1]