JJHB(SH:603279) EBSCN·2024-09-19 03:38Investment Rating - The report initiates coverage with a "Buy" rating for the company [5]. Core Views - The company is a global leader in the filter press industry, with over 30 years of experience and a market share of approximately 47% in China as of 2022 [1][31]. - The company is actively expanding its product applications and exploring new markets, particularly in the mineral processing, environmental protection, and new energy sectors [1][35]. - The company is expected to achieve significant growth in net profit from 1.05 billion yuan in 2024 to 1.37 billion yuan in 2026, with corresponding EPS increasing from 1.82 yuan to 2.38 yuan [1]. Summary by Sections Company Overview - Founded in 1988, the company specializes in manufacturing complete filtration equipment and is recognized as a champion in a specific manufacturing sector in China [12]. - The company has a strong R&D capability, having developed various filtration equipment widely used across multiple industries, including environmental protection, mining, and new energy [12][31]. Market Position and Financial Performance - The company achieved a revenue of 6.25 billion yuan in 2023, a year-on-year increase of 10%, driven primarily by the new energy sector [16]. - The net profit for 2023 was 1.01 billion yuan, reflecting a 20.9% increase compared to the previous year, attributed to a decrease in raw material prices [16]. - The company maintains a stable gross margin around 30%, with a net margin that has improved from 5.5% in 2013 to 16.1% in 2023 [22]. Downstream Applications - The company’s filtration equipment is widely used in various sectors, with the revenue distribution in 2023 being: 26.6% from minerals and processing, 25.8% from environmental protection, 24.6% from new energy, and 9.8% from chemicals [35]. - The company has established strong partnerships with leading firms in the lithium battery industry, enhancing its position in the new energy market [2]. Growth Opportunities - The company is poised to benefit from increased capital expenditure in the mining sector, with a compound annual growth rate (CAGR) of 34.4% in China's mining foreign investment from 2018 to 2022 [1]. - The company is also focusing on developing supporting equipment and components, which is expected to generate nearly 3 billion yuan in annual revenue once fully operational [2].