JIULI Hi-tech(002318) Huachuang Securities·2024-10-31 13:46Investment Rating - The report maintains a "Strong Buy" rating for the company, with a target price of 27.36 CNY, indicating an expected upside of approximately 18% from the current price of 23.16 CNY [1][2]. Core Insights - The company's Q3 2024 performance shows stable growth in its main business, with total revenue reaching 71.43 billion CNY, a year-on-year increase of 16.07%. However, the net profit attributable to shareholders decreased by 5.68% to 10.45 billion CNY. The adjusted net profit, excluding non-recurring items, increased by 15.60% to 10.17 billion CNY [1][2]. - The sales profit margin significantly improved, with a gross margin of 31.15% in Q3 2024, up 8.3 percentage points from Q2. The net profit margin also increased to 17.66%, reflecting strong profitability resilience in high-end products [2]. - The company has shown a sequential increase in core business profits, with a non-recurring net profit of 3.5 billion CNY in Q3, up 21.11% from Q2, indicating growth in its main business despite a challenging market environment [2]. Financial Summary - For the first three quarters of 2024, the company achieved a gross margin of 26.93% and a net margin of 15.03%, with the latter showing a decline of 2.97 percentage points compared to the same period in 2023 [2]. - The projected financials for the company from 2024 to 2026 indicate total revenues of 10.84 billion CNY in 2024, with a year-on-year growth rate of 26.5%. The net profit is expected to be 1.46 billion CNY in 2024, reflecting a slight decline of 1.8% [3][6]. - The company’s total assets are projected to grow from 13.02 billion CNY in 2023 to 18.72 billion CNY by 2026, with a debt-to-asset ratio of 43.96% [4][6]. Market Position and Growth Potential - The company is focusing on high-end product development, particularly in alloy materials and composite pipes, which are expected to drive future growth despite a decline in traditional oil and gas sector demand [2][3]. - The report anticipates that the company will achieve net profits of 14.61 billion CNY, 16.68 billion CNY, and 18.48 billion CNY from 2024 to 2026, with respective growth rates of -1.8%, 14.1%, and 10.8% [2][3].