HAILIANG(SZ:002203) Hua Yuan Zheng Quan·2024-10-10 02:34Investment Rating - The report gives a "Buy" rating for the company, marking its first coverage [4][13]. Core Views - The company is a global leader in copper processing, with ongoing overseas expansion and production line upgrades driving capacity growth [5][10]. - In H1 2024, the company's copper product sales exceeded 500,000 tons, with a year-on-year growth of 14.04%, and the copper foil segment significantly contributed to net profit [4][5]. - The company plans to invest in new production lines in Morocco, enhancing its global supply chain and market presence [7][10]. Summary by Sections Market Performance - As of October 9, 2024, the closing price is 8.79 CNY, with a market capitalization of 176.65 billion CNY [2]. Financial Performance - In H1 2024, the company achieved copper sales of 506,900 tons, with a net profit contribution from traditional businesses of 7.64 billion CNY, a 3.7% increase year-on-year [4]. - The gross margins for copper pipe, rod, and strip products were 5.78%, 5.56%, and 1.88%, respectively, showing slight declines in some segments [4]. Production Capacity Expansion - The company is upgrading its copper pipe production lines to the fifth generation, with an expected capacity increase from 79.8 million tons to 131 million tons, significantly enhancing operational efficiency and reducing costs [10][12]. - The total investment for the upgrades is approximately 76.4 million CNY for new projects and 69.5 million CNY for retrofitting existing lines [10][12]. Profit Forecast and Valuation - The forecasted net profits for 2024, 2025, and 2026 are 13.06 billion CNY, 15.80 billion CNY, and 17.34 billion CNY, respectively, with corresponding PE ratios of 13, 11, and 10 [13][14]. - The company is compared to peers with average PE ratios of 27, 21, and 17 for the same years, indicating a favorable valuation [13][14].