YONGXING MATERIALS(SZ:002756) Guoxin Securities·2024-09-01 04:03Investment Rating - The report maintains an "Outperform the Market" rating for the company [3][5][12]. Core Views - The company has optimized lithium salt costs and maintained high gross margins in special steel products despite a significant decline in lithium prices. The sales strategy focuses on key customers and long-term contracts to ensure stable operations in the lithium business [1][3][8]. - The company has a strong cash flow position, with a debt-to-asset ratio of only 14.31% and cash reserves of approximately 8.4 billion yuan, allowing for a proposed mid-term dividend distribution of 5 yuan per 10 shares [2][10]. Financial Performance Summary - For the first half of 2024, the company reported revenue of 4.492 billion yuan, a year-on-year decrease of 32.50%, and a net profit attributable to shareholders of 768 million yuan, down 59.63% [1][6]. - The company’s revenue for Q1 and Q2 was 2.3 billion yuan and 2.192 billion yuan, respectively, with a quarter-on-quarter decline of 4.70% in Q2. The net profit for Q1 and Q2 was 468 million yuan and 300 million yuan, respectively, with a quarter-on-quarter decline of 35.88% in Q2 [1][6]. Key Projects and Developments - The company’s subsidiary, Huqiao Mining, has completed the change of mining rights registration, increasing the production capacity from 3 million tons per year to 9 million tons per year. The company is also advancing several key projects, including a lithium extraction project and a high-efficiency lithium ore selection project [1][8]. - In the special steel business, the company has adjusted its product structure in response to the recovery in energy steel demand, resulting in a significant increase in gross margin per ton of steel, with over 40% of sales coming from products with a gross margin exceeding 2,000 yuan per ton [1][8].