Huahong Technology(002645) 国泰君安·2024-08-28 08:14Investment Rating - The report maintains a "Buy" rating for the company [2][4]. Core Views - The company has turned profitable in H1 2024 due to stabilized rare earth prices and profitable subsidiaries in recycled rare earth and magnetic materials [3][4]. - The target price has been adjusted down to 7.53 yuan from the previous 13.35 yuan, reflecting a revised profit forecast for 2024-2026 [4]. Summary by Sections Financial Performance - In H1 2024, the company achieved revenue of 2.696 billion yuan, a 24% year-on-year decline, but reported a net profit of 2.224 million yuan, marking a turnaround from losses [4]. - The net profit forecast for 2024-2025 has been revised to 184 million yuan (previously 378 million yuan) and 266 million yuan (previously 412 million yuan) respectively, with an EPS of 0.32 yuan for 2024 and 0.46 yuan for 2025 [4][10]. Business Development - The company plans to expand its magnetic materials production capacity by 10,000 tons per year and is focusing on upstream recycling of rare earth materials from old electric vehicle motors [4]. - A new project in Baotou, Inner Mongolia, aims to produce 10,000 tons of high-performance rare earth permanent magnetic materials, with an estimated investment of 400 million yuan [4]. Market Position - The company’s subsidiaries in recycled rare earth and magnetic materials have shown profitability compared to the same period in 2023, with profits of 4.21 million yuan, 5.56 million yuan, and 13.78 million yuan respectively [4]. - The foreign sales of the elevator components segment increased by 3% year-on-year, with revenue of 122 million yuan in H1 2024 [4].