CHINA TUNGSTEN HIGHT(000657) 民生证券·2024-10-28 07:30Investment Rating - The report maintains a "Recommend" rating for the company [4] Core Views - The company's Q3 2024 performance fell below expectations due to weak demand and intensified market competition [2] - The company's net profit margin and gross margin declined in Q3 2024, with gross margin dropping to 14.75% YoY [2] - The company is expected to improve profitability through increased tool production capacity and the upcoming injection of tungsten mines [2] Financial Performance - In Q1-Q3 2024, the company achieved revenue of RMB 10.229 billion, a YoY increase of 7.13%, but net profit attributable to shareholders decreased by 34.66% YoY to RMB 206 million [2] - In Q3 2024, revenue was RMB 3.422 billion, a YoY increase of 13.99%, but net profit attributable to shareholders decreased by 19.35% YoY to RMB 59 million [2] - The company's net profit margin in Q3 2024 was 2.37%, a YoY decrease of 0.75 percentage points [2] Future Prospects - The company plans to acquire 100% equity of Shizhuyuan Company, which will help complete the tungsten industry chain [2] - The company is expanding production of CNC blades and micro-drills, with expected production of 200 million CNC blades by 2025 and 700 million PCB micro-drills by the end of the 14th Five-Year Plan [2] Financial Forecasts - The company's revenue is expected to grow from RMB 13.471 billion in 2024E to RMB 15.985 billion in 2026E [3] - Net profit attributable to shareholders is forecasted to increase from RMB 282 million in 2024E to RMB 536 million in 2026E [3] - The company's PE ratio is expected to decrease from 46 in 2024E to 24 in 2026E [3] Financial Ratios - The company's gross margin is expected to improve from 15.47% in 2024E to 16.78% in 2026E [5] - ROE is forecasted to increase from 4.85% in 2024E to 8.92% in 2026E [5] - The company's debt-to-asset ratio is expected to rise from 51.98% in 2024E to 53.83% in 2026E [5]