Huarui Precision(SH:688059) Xin Lang Cai Jing·2025-05-06 09:18Core Viewpoint - The company reported a decline in revenue and net profit for 2024, but showed signs of recovery in Q1 2025 with significant growth in both revenue and net profit due to improved downstream demand [1][2]. Financial Performance - In 2024, the company achieved revenue of 759 million yuan, a year-on-year decrease of 4.43%, and a net profit attributable to shareholders of 107 million yuan, down 32.26% [1]. - For Q4 2024, the company reported revenue of 175 million yuan, a decline of 15.57%, and a net profit of 30 million yuan, down 42.78% [1]. - In Q1 2025, the company achieved revenue of 222 million yuan, a year-on-year increase of 30.48%, and a net profit of 29 million yuan, up 70.00% [1]. Margin Analysis - The company's overall gross margin for 2024 was 39.46%, down 6.01 percentage points year-on-year, while the net profit margin was 14.09%, down 5.79 percentage points [2]. - The decline in gross margin was attributed to insufficient capacity utilization due to weak demand, a decrease in the revenue share of higher-margin products, and rising prices of raw materials like tungsten carbide [2]. - In Q1 2025, the gross margin was 35.5%, down 1.8 percentage points year-on-year, but the net profit margin improved to 13.2%, an increase of 3.1 percentage points [2]. Cost Management - The company managed to reduce its expense ratio in 2024 to 20.51%, down 0.63 percentage points year-on-year, with reductions in sales, management, and R&D expense ratios [2]. - In Q1 2025, the expense ratio further decreased to 16.5%, a significant drop of 7.2 percentage points year-on-year [2]. Future Outlook - The company is projected to achieve net profits of 150 million, 200 million, and 270 million yuan for 2025, 2026, and 2027 respectively, with a compound annual growth rate of 22% in revenue over the next three years [3]. - The company is recognized as a leading domestic manufacturer of CNC tools and is rated as "hold" [3].