Luyang Energy-saving Materials (002088) Tianfeng Securities·2024-09-01 06:03Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 13.7 CNY, reflecting a 14x PE for 2024 [4][5]. Core Views - The company has shown stable revenue in its ceramic fiber products, with new product synergies expected to gradually materialize. The first half of the year saw a revenue of 1.61 billion CNY and a net profit of 210 million CNY, representing a year-on-year decline of 4.2% and 7.6% respectively [1][2]. - The company is positioned as a leader in the ceramic fiber industry in China, with significant advantages in scale, cost, and product offerings. The demand for ceramic fibers is anticipated to grow due to national initiatives for equipment upgrades and energy conservation [4][5]. Financial Performance - In the first half of the year, the company achieved a gross margin of 28.8%, a slight decrease of 1.69 percentage points year-on-year. The gross margins for ceramic fiber products, automotive pads, and industrial filtration products were 30.98%, 6.83%, and 10.58% respectively [3]. - The company reported an operating cash flow of 210 million CNY, a year-on-year increase of 49.5%, primarily due to reduced payments for raw materials, energy, and taxes [3][11]. Revenue Breakdown - The revenue from ceramic fiber products, automotive pads, and industrial filtration products for the first half of the year was 1.44 billion CNY, 68 million CNY, and 95 million CNY respectively, with year-on-year changes of -0.75%, -46.25%, and +20.51% [2]. - The company’s subsidiary in Inner Mongolia contributed 258 million CNY in revenue, marking a 1.1% increase year-on-year, with a net profit of 51 million CNY, up 53% [2]. Future Outlook - The company has adjusted its net profit forecasts for 2024-2026 to 500 million CNY, 600 million CNY, and 711 million CNY respectively, down from previous estimates [4]. - The report highlights the potential for cost reductions through local production of raw materials and technological upgrades, which could enhance profitability in the future [3].