Yunlu Materials(688190)2024-10-28 10:12Investment Rating - The report initiates coverage with a "Buy" recommendation for Yunlu Co., Ltd. [1][3] Core Views - Yunlu Co., Ltd. is a global leader in the amorphous alloy industry, with rapid revenue and net profit growth. The company has focused on advanced magnetic metal materials for years, expanding from amorphous alloys to include nanocrystalline and magnetic powder materials, achieving a compound annual growth rate (CAGR) of 26.2% in revenue and 41.7% in net profit from 2019 to 2023 [3][23]. Summary by Sections 1. Company Overview - Yunlu Co., Ltd. (688190.SH) was established in December 2015 and is controlled by the China Aviation Engine Group. The company has developed a comprehensive solution provider in advanced magnetic metal materials, focusing on R&D, production, and application [16][18]. 2. Amorphous Alloy Business - The amorphous alloy is a core material for amorphous transformers, with diverse downstream applications. The demand for amorphous materials is expected to grow at a CAGR of 20% from 2024 to 2027, driven by energy-efficient transformer policies [3][40][50]. - The company has built a production base for 100,000 tons of amorphous strip and is expected to benefit significantly from the increasing penetration of amorphous transformers in the market [3][23]. 3. Nanocrystalline and Magnetic Powder Business - The nanocrystalline and magnetic powder segments are rapidly growing, with the global market for nanocrystalline materials projected to grow from $349 million in 2023 to $721 million by 2029, at a CAGR of 12.9% [3][18]. - The company achieved sales of 5,060 tons of nanocrystalline products in 2023, with revenue of 227 million yuan, positioning it in the second tier globally [3][18]. 4. Financial Forecast and Valuation - The forecast for net profit attributable to shareholders for 2024, 2025, and 2026 is 359 million yuan, 438 million yuan, and 524 million yuan, respectively, with corresponding price-to-earnings (PE) ratios of 26.1x, 21.4x, and 17.9x [3][7]. 5. Market Position and Growth Potential - The company has established a strong market presence, exporting to 18 countries and regions, and has formed stable partnerships with major players in the power electronics industry [21][23]. - The penetration rate of amorphous motors is expected to increase rapidly, with significant growth potential in the electric vehicle sector [3][40].