Yangling Metron New Material (300861) Donghai Securities·2024-09-02 15:30Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook based on performance reviews [5]. Core Views - The report adjusts the company's profit forecast based on changes in diamond wire prices, projecting net profits of 476 million, 578 million, and 766 million yuan for 2024-2026, respectively, with corresponding P/E ratios of 17.56, 14.45, and 10.91 times [5]. - The company is recognized as a leader in the diamond wire industry, benefiting from a comprehensive supply chain integration that enhances cost advantages [6]. Summary by Sections Company Overview - As of September 2, 2024, the company's closing price is 17.40 yuan, with a total share capital of 48,001 million shares and a debt-to-asset ratio of 10.60% [4]. Financial Performance - In the first half of 2024, the company reported a revenue of 1.484 billion yuan, a year-on-year decrease of 31.55%, and a net profit of 276 million yuan, down 69.11% year-on-year [6]. - The second quarter of 2024 saw a revenue of 628 million yuan, a decline of 46.55% year-on-year and 26.75% quarter-on-quarter, with a net profit of 80 million yuan, down 84.36% year-on-year [6]. Industry Context - The diamond wire industry is facing profitability pressures, with significant price drops in carbon steel wire since late 2023, although prices have stabilized recently [6]. - The company maintains a gross margin of 24.90% and a net margin of 12.97% in Q2 2024, showcasing resilience despite industry challenges [6]. Future Outlook - The company is advancing in tungsten wire production, which is expected to improve profitability as it replaces carbon steel wire [8]. - The financial position is robust, with cash reserves of 1.09 billion yuan and a significant improvement in operating cash flow, indicating the ability to navigate industry downturns [8].