JIULI Hi-tech(002318) 东方证券·2024-11-04 00:45Investment Rating - Buy (Maintained) with a target price of 26.99 RMB [1] Core Views - The company reported Q3 2024 revenue of 7.14 billion RMB, up 16.1% YoY, and net profit attributable to shareholders of 1.045 billion RMB, down 5.7% YoY [2] - Excluding investment income from associates, net profit attributable to shareholders increased by 52.3% YoY to 975 million RMB [2] - Q3 2024 revenue was 2.31 billion RMB, down 3.2% YoY, while net profit attributable to shareholders increased by 1.3% YoY to 401 million RMB [2] - Gross margin in Q3 2024 reached 31.2%, up 8.3 percentage points QoQ, reflecting progress in high-end product strategy [2] - R&D expense ratio in Q3 2024 was 4.38%, up 0.21 percentage points YoY and 0.39 percentage points QoQ [2] - The company announced a share buyback plan of 150-300 million RMB, demonstrating confidence in future development [2] Financial Performance - Revenue for 2024E is projected at 11.046 billion RMB, up 28.9% YoY, with net profit attributable to shareholders of 1.383 billion RMB, down 7.1% YoY [1] - EPS for 2024E is forecasted at 1.42 RMB, down from the previous estimate of 1.46 RMB [3] - Gross margin is expected to remain stable at around 25% from 2024E to 2026E [1] - ROE is projected to decline slightly from 22.1% in 2023A to 17.8% in 2024E, before recovering to 18.5% in 2025E [1] Valuation - DCF valuation method used with a WACC of 8.27% and perpetual growth rate of 1% [6] - Target price of 26.99 RMB implies a 19.2% upside from the current price of 22.64 RMB [1] Industry and Strategy - The company continues to focus on high-end stainless steel pipe products, with revenue from high-value-added products in high-end equipment manufacturing and new materials reaching 22% of total revenue in H1 2024, up 40% YoY [2] - The "Quality and Return Dual Improvement" action plan aims to increase R&D investment and improve dividend payouts [2] - The acquisition of German EBK in 2023 is expected to contribute to future growth [3]