TORCH ELECTRON(603678) 中航证券·2024-09-02 08:41Investment Rating - The investment rating for the company is "Buy," indicating an expected return exceeding 10% relative to the CSI 300 index over the next six months [9]. Core Views - The report highlights that Torch Electronics (603678) is expected to open a second growth curve in ceramic materials, despite a decline in revenue and net profit in the first half of 2024 [2]. - The company achieved operating revenue of 1.43 billion yuan, down 9.6% year-on-year, and a net profit attributable to shareholders of 160 million yuan, down 35.2% [2]. - The report notes a gradual stabilization in the military electronic components sector, with expectations for recovery as deliveries accelerate towards the end of the 14th Five-Year Plan [2]. - The ceramic materials segment is currently transitioning from research to mass production, with significant growth anticipated in the second half of 2024 [2]. Financial Performance Summary - In the first half of 2024, the company reported a gross margin of 32.9%, with a slight increase in the second quarter to 33.3% [2][6]. - The company's operating income for 2024 is projected to be 3.51 billion yuan, reflecting a minimal growth of 0.21% compared to 2023 [4]. - The net profit attributable to shareholders is expected to reach 321 million yuan in 2024, a slight increase of 0.74% from the previous year [4]. - The report indicates that the company's management expenses increased by 17.9%, primarily due to higher asset depreciation [4]. Business Segment Analysis - The self-produced passive components segment generated revenue of 540 million yuan, down 17.4% year-on-year, attributed to a decrease in the number of specifications shipped [7]. - The new materials segment reported revenue of 66 million yuan, down 15.1%, mainly due to project completions leading to a gap in business [7]. - The trading business generated revenue of 82 million yuan, down 3.4%, impacted by intensified competition [7]. Market Outlook - The report anticipates a recovery in demand for electronic components, although fluctuations are expected due to pricing pressures and cyclical demand [2]. - The ceramic materials sector is characterized by oligopolistic competition, with expectations for increased demand as projects near completion [2].