Wencan(SH:603348) Huachuang Securities·2024-08-20 08:10Investment Rating - The report maintains a "Strong Buy" rating for the company with a target price of 25.8 CNY, compared to the current price of 21.96 CNY [1]. Core Views - The company's revenue for the first half of 2024 reached 3.08 billion CNY, a year-on-year increase of 20%. The main division contributed 1.66 billion CNY, up 47% year-on-year, while the subsidiary Bailian reported 1.42 billion CNY, down 1% year-on-year. The net profit attributable to shareholders was 82 million CNY, a significant increase of 4.9 times year-on-year [1]. - Revenue growth is attributed to the increase in structural components, aligning with expectations. In Q2 2024, the company achieved revenue of 1.6 billion CNY, a 24% year-on-year increase and an 8% quarter-on-quarter increase, driven by major customer sales [1]. - The company is facing pressure on profits due to increased interest expenses and the ramp-up of its Mexican factory. The gross margin was reported at 13.9%, with fluctuations influenced by aluminum prices and production quality costs [1]. Summary by Sections Financial Performance - The company reported total revenue of 5.101 billion CNY in 2023, with projections of 6.578 billion CNY for 2024, 7.855 billion CNY for 2025, and 9.496 billion CNY for 2026, reflecting a growth rate of -2.4%, 28.9%, 19.4%, and 20.9% respectively [3]. - The net profit attributable to shareholders is projected to recover from 50 million CNY in 2023 to 212 million CNY in 2024, 397 million CNY in 2025, and 521 million CNY in 2026, with growth rates of -78.8%, 320.1%, 87.5%, and 31.2% respectively [3]. Market Position and Strategy - The company has completed a 1.05 billion CNY private placement to support long-term growth, with new production capacities planned in Chongqing, Anhui, and Foshan, expected to generate an additional annual revenue of 4 billion CNY [1]. - The report highlights the company's competitive advantage in integrated die-casting, with significant market share expected to increase to 18% in 2024 and 19% in 2025 due to early project approvals and technological advantages [1]. - The company is positioned as a leader in the integrated die-casting industry, with expectations for recovery in performance in the second half of the year and into 2025 [1].