HXG(SH:603112) Guoxin Securities·2024-09-11 04:03Investment Rating - The report assigns an "Outperform" rating to the company [2][3]. Core Views - The company is a leading comprehensive casting enterprise in China, focusing on multiple business lines, particularly in the white goods, engineering machinery, and automotive manufacturing sectors [2][3]. - The company has shown a strong performance with a revenue CAGR of 11.63% and a net profit CAGR of 21.77% from 2017 to 2023, indicating improved profitability [2][4]. - The company is actively expanding its production capacity and optimizing processes to enhance its high-margin machining components, which is expected to drive future growth [2][4]. Financial Performance - Revenue and net profit for the first half of 2024 reached 1.93 billion yuan and 231 million yuan, respectively, representing year-on-year growth of 25.74% and 30.92% [2][4]. - The gross margin and net margin for the first half of 2024 were approximately 21.42% and 11.47%, showing a slight decrease in gross margin but an increase in net margin compared to previous years [2][4]. - The company has maintained a stable operating cash flow, with a net cash flow from operating activities of 254 million yuan in the first half of 2024, a 19.25% increase year-on-year [8]. Earnings Forecast - The company is expected to achieve net profits of 476 million yuan, 592 million yuan, and 698 million yuan for the years 2024, 2025, and 2026, respectively, with corresponding year-on-year growth rates of 22.3%, 24.5%, and 17.9% [14][15]. - Revenue projections for 2024, 2025, and 2026 are 40.88 billion yuan, 48.32 billion yuan, and 55.43 billion yuan, reflecting growth rates of 25.25%, 18.20%, and 14.73% [12][14]. Business Segments - The precision components segment, which includes white goods compressor parts and automotive parts, is projected to grow significantly, with expected revenue increases of 30%, 20%, and 15% over the next three years [11]. - The engineering machinery parts segment is anticipated to maintain steady growth, with revenue growth rates of 15% for the next three years [11]. - The iron and recycled resources segment is expected to decline, with projected revenue decreases of 20% and 50% in the coming years [12]. Shareholder Structure and Incentives - The company has a stable shareholder structure, with the controlling shareholder holding 62.02% of the shares, and has implemented stock incentive plans to align employee interests with company performance [9][10]. - The recent stock incentive plan aims for a compound annual growth rate (CAGR) of 20.76% in net profit over the next three years, reflecting strong confidence in future growth [9][10].