HQTI(SH:688281) ZHESHANG SECURITIES·2024-09-25 08:03Investment Rating - The report initiates coverage with a "Buy" rating for the company [3][6][5]. Core Insights - The company has maintained rapid growth in the special functional materials sector, particularly in stealth materials, with revenue increasing from 0.5 million to 9.2 million from 2018 to 2023, reflecting a CAGR of 80% [2][15]. - The company is actively expanding into new business areas, including acoustic materials and aerospace engine components, which significantly broadens its growth potential [2][3]. - The demand for stealth materials is robust, driven by military applications, and the market is expected to grow substantially in the coming years [2][3]. Financial Summary - The projected revenue for 2024, 2025, and 2026 is 12.4 billion, 16.7 billion, and 22.2 billion respectively, with year-on-year growth rates of 35% for both 2024 and 2025, and 32% for 2026 [3][6]. - The expected net profit for the same years is 5.2 billion, 6.5 billion, and 8.0 billion, with growth rates of 56%, 25%, and 23% respectively [3][6]. - Earnings per share (EPS) are projected to be 2.7, 3.3, and 4.1 for 2024, 2025, and 2026, with corresponding price-to-earnings (P/E) ratios of 26, 21, and 17 [3][6]. Business Expansion and Market Potential - The company is positioned as a leader in the mid-to-high temperature stealth materials market, with significant barriers to entry and a competitive edge due to its technological advancements [2][3]. - The market for stealth materials is expected to reach 41 billion by 2028, with a CAGR of 39% from 2020 to 2028, indicating strong future demand [2][3]. - The company is also focusing on the aerospace engine market, which is projected to reach 667 billion by 2026, with a CAGR of 15% from 2023 to 2026 [2][3]. Research and Development - The company has a strong R&D foundation, having invested significantly in developing stealth materials since 1996, and has achieved several key technological breakthroughs [15][22]. - R&D expenses have shown a CAGR of 67% from 2018 to 2023, indicating a commitment to innovation and maintaining competitive advantages [22][25].