华锐精密：费用管控良好，中报利润恢复增长

Investment Rating - The report maintains a "Buy" rating for Huarui Precision (688059 CH) with a target price of RMB 83.25, down from the previous target of RMB 108 [1][4] Core Views - Huarui Precision's H1 2024 revenue reached RMB 410 million, a 15% YoY increase, with net profit attributable to shareholders of RMB 71.94 million, also up 15% YoY [1] - Q2 2024 revenue grew 16% YoY and 41% QoQ, with net profit surging 43% YoY and 219% QoQ [1] - The company's profit recovery is attributed to improved cost control and operational efficiency [1][3] Financial Performance - Q2 2024 gross margin reached 46.4%, up 1.9 ppts YoY, while net margin improved to 22.8%, up 4.3 ppts YoY [3] - Sales, management, and R&D expense ratios decreased by 1.0, 1.3, and 1.4 ppts respectively in Q2 2024 [3] - Overseas revenue in H1 2024 reached RMB 23.05 million, a 43% YoY increase [2] Market Position and Strategy - The company's Q2 revenue growth may be driven by increased market share and domestic substitution of imported tools [2] - Huarui Precision expanded its product matrix with 3 new base material grades, 1 PVD coating material, and 4 new coating processes in H1 2024 [2] - The company is strengthening its domestic market presence while improving its overseas distribution system [2] Valuation and Forecasts - The report lowers 2024-2025 net profit forecasts by 22% and 12% respectively, introducing a 2026 forecast of RMB 330 million [1] - The company's 2024E PE is set at 25x, below the industry average of 35x [1] - Revenue is expected to grow from RMB 986 million in 2024E to RMB 1.335 billion in 2026E, with net profit projected to increase from RMB 206 million to RMB 331 million over the same period [5][9] Operational Highlights - The company's R&D expenses increased by 2.3% YoY in H1 2024, maintaining stable investment in innovation [3] - Capacity utilization of blade products improved, contributing to margin expansion [3] - The proportion of low-margin complete tool business decreased, further boosting profitability [3]