TIANMA TECH(SH:603668) Southwest Securities·2024-07-24 03:00Investment Rating - The report maintains a "Buy" rating for the company, with a current price of 12.05 CNY and a target price not specified for the next six months [3][5]. Core Insights - The company has reached an inflection point in its performance, with both volume and price of eel products increasing, leading to a turnaround from losses to profitability [3][5]. - In the first half of 2024, the company reported total revenue of 3.009 billion CNY, a year-on-year decrease of 9.81%, but a net profit attributable to shareholders of 56 million CNY, marking a return to profit [3][4]. - The rapid growth in eel farming and improved profit structure are attributed to factors such as climate change, stocking density, and market conditions, with eel output surpassing 7,600 tons for the first time in history during the first half of 2024 [2][4]. Summary by Sections Financial Performance - In Q2 2024, the company achieved total revenue of 1.648 billion CNY, a year-on-year decrease of 8.73%, with a net profit of 50 million CNY, indicating a return to profitability [3][4]. - The company’s revenue for 2024 is projected to be 6.998 billion CNY, with a growth rate of 21.71% expected in 2025 [7]. Eel Farming and Production - The company’s eel farming business has seen significant capacity release, with a historical high of 7,600 tons of eel output in the first half of 2024, and 5,319 tons in Q2 alone [2][4]. - The gross margin in the farming segment remains high, contributing to an improved profit structure as the scale of eel production expands [4]. Investment and Shareholder Confidence - The controlling shareholder has increased their stake by over 50 million CNY from February to July 2023, reflecting confidence in the company's future [4]. - The company completed its employee stock ownership plan in March 2024, purchasing 20,731,400 shares, which is 4.54% of the total share capital, at an average price of 15.78 CNY per share [4]. Earnings Forecast - The expected earnings per share (EPS) for 2024-2026 are projected to be 0.6 CNY, 1.02 CNY, and 1.64 CNY, respectively, with corresponding dynamic price-to-earnings (PE) ratios of 20x, 12x, and 7x [5][7].