HQTI(688281) AVIC Securities·2024-10-31 06:43Investment Rating - The investment rating for the company is "Buy" with a target price of 125 CNY, indicating an expected return of over 10% relative to the CSI 300 index in the next six months [1][30]. Core Views - The company has reported strong revenue growth, achieving 738 million CNY in revenue for the first three quarters of 2024, a year-on-year increase of 22.55%, and a net profit of 309 million CNY, up 14.41% year-on-year [1]. - The company is a core supplier of stealth materials and camouflage materials for military applications, with products used in major national defense equipment such as aircraft, tanks, and missiles [1][4]. - The company has a robust order backlog, with significant contracts announced in early 2024, including two large contracts worth 310 million CNY and 332 million CNY, and another contract worth 132 million CNY [3][4]. - The company is expanding its business into high-end new materials, including advanced composite materials and acoustic metamaterials, which are expected to enhance its growth potential [4][8]. Summary by Sections Financial Performance - For Q3 2024, the company reported revenue of 253 million CNY, a year-on-year increase of 14.77% and a quarter-on-quarter increase of 6.34%. The gross margin was 51.42%, down 8.77 percentage points year-on-year [1][4]. - The company’s inventory increased significantly to 243 million CNY, up 94.03% from the beginning of the year, driven by increased costs related to product delivery and contract fulfillment [1][4]. Business Expansion - The company is actively developing new projects through its subsidiaries, focusing on components for aircraft engines and advanced materials, with some production lines expected to enter trial phases in Q4 2024 [4][8]. - The application of stealth materials in military equipment is expected to grow significantly, driven by advancements in reconnaissance technology and modern electronic warfare [4][8]. Future Projections - Revenue projections for 2024-2026 are estimated at 1.16 billion CNY, 1.46 billion CNY, and 1.81 billion CNY, respectively, with net profits expected to reach 500 million CNY, 613 million CNY, and 750 million CNY [8].