Huarui Precision(688059) 西南证券·2024-08-07 02:30Investment Rating - The report maintains a "Buy" rating for the company, with a current price of 44.00 CNY and a projected compound annual growth rate (CAGR) of 32% for net profit from 2024 to 2026 [1]. Core Insights - The company reported a revenue of 410 million CNY for H1 2024, representing a year-on-year increase of 14.9%, and a net profit of 71.94 million CNY, up 15.3% year-on-year. In Q2 2024, revenue reached 240 million CNY, a growth of 16.17%, with net profit soaring by 43.10% to 54.75 million CNY [2]. - The company is investing approximately 360 million CNY to build a high-performance rod material digital production line, which will add an annual production capacity of 1,000 tons of high-performance rods, enhancing the quality and reliability of raw materials for tool production [2]. - The significant growth in net profit for Q2 2024 is attributed to revenue growth, improved gross margins, and reduced expense ratios. The gross margin for Q2 2024 was 46.4%, up 1.9 percentage points year-on-year and 9.1 percentage points quarter-on-quarter [2]. Summary by Sections Financial Performance - The company expects net profits of 200 million CNY, 280 million CNY, and 360 million CNY for 2024, 2025, and 2026 respectively, with a CAGR of 32% [1]. - For H1 2024, overseas revenue was 23 million CNY, a 43% increase year-on-year, indicating strong international market expansion [2]. Market Outlook - The report suggests that the company will benefit from an upward trend in the domestic cycle, with a potential recovery in the tool industry as inventory depletion comes to an end. The domestic market for CNC blades has significant room for growth due to low localization rates [3]. - The overseas market for tools is approximately four times larger than the domestic market, and the company is focusing on expanding its international presence, with overseas revenue growth of 61% in 2023 and 43% in H1 2024 [3].