Baimtec Material (SH:688563) AVIC Securities·2024-09-06 03:30Investment Rating - The investment rating for the company is "Buy" with a target price of 69.30 CNY, indicating an expected return of over 10% relative to the CSI 300 index in the next six months [3][22]. Core Views - The company is the only publicly listed comprehensive aviation materials company under AVIC, with significant advantages in the market [6][13]. - The company has shown steady revenue growth, with a 14.52% increase in revenue to 1.51 billion CNY in the first half of 2024, and a net profit increase of 5.16% to 311 million CNY [6][10]. - The company is actively expanding its market presence, particularly in international aviation equipment, and has a strong order backlog of 1.15 billion CNY, which will be recognized as revenue in 2024 [8][10]. Summary by Sections Financial Performance - In the first half of 2024, the company reported revenue of 1.51 billion CNY (+14.52%) and a net profit of 311 million CNY (+5.16%). The gross margin was 29.44% (-5.92 percentage points), and the net margin was 20.61% (-1.83 percentage points) [3][6]. - For Q2 2024, revenue was 831 million CNY (+12.94% YoY, +22.45% QoQ), with a net profit of 163 million CNY (-6.82% YoY, +10.02% QoQ) [6][10]. Market Position and Competitive Advantage - The company is positioned as the sole supplier of aviation new materials within the AVIC group, covering a wide range of products used in aviation, aerospace, and other industries [6][13]. - The company has developed a strong competitive edge in high-temperature alloy casting and titanium alloy precision casting, which are critical for aviation engine components [10][11]. Research and Development - The company maintains a high R&D expenditure rate of 6.82%, focusing on key technology projects and responding to market changes [7][10]. - The R&D efforts have led to the development of various sealing agents and materials for domestic aircraft, enhancing the company's product offerings [6][10]. Cash Flow and Operational Efficiency - The company experienced a significant decrease in net cash flow from operating activities, reporting -173 million CNY, primarily due to increased business scale and investments [10][20]. - The company is addressing capacity bottlenecks through multiple initiatives, including five fundraising projects and the transfer of equity in a subsidiary to enhance production capacity [10][11]. Future Outlook - The company is expected to achieve revenue of 3.33 billion CNY in 2024, with projected net profits of 666 million CNY, reflecting a growth rate of 15.54% [14][20]. - The anticipated revenue growth is supported by a strong order backlog and ongoing market expansion efforts [8][13].