Luohe Letone Hydraulics Technology (BJ:832225) Soochow Securities·2025-01-27 00:15Investment Rating - The report gives an "Accumulate" rating for the company, marking its first coverage [3]. Core Viewpoints - The company has a solid foundation in the rubber hose industry and is expanding into materials and equipment services. It has developed proprietary brands in hydraulic hoses and is successfully replacing some high-performance international brands. The company is also focusing on high-value products like acid fracturing hoses, which have significantly improved its gross margin [3][12]. - The company's revenue and net profit are expected to grow steadily, with projected net profits of 105 million, 133 million, and 155 million yuan for 2024, 2025, and 2026, respectively. The corresponding price-to-earnings ratios are 14.23, 11.26, and 9.64 times [3][12]. Summary by Sections Company Overview - The company, established in 2003, specializes in rubber hoses, fittings, and related products, and has been recognized as a top player in the hydraulic hose sector in China. It has achieved significant growth in overseas markets, particularly in high-value products like acid fracturing hose assemblies [9][12]. Market Potential - The rubber hose market is expanding, driven by demand in various sectors such as oil extraction, engineering machinery, and other industries. The global industrial hose market is projected to grow from 12.8 billion USD in 2019 to 17 billion USD by 2024, with a compound annual growth rate of 5.8% [9][12][39]. Financial Performance - The company has shown a steady increase in revenue, with a compound annual growth rate of 16.64% from 2019 to 2023. The net profit has grown at a compound annual growth rate of 44.19% during the same period. The revenue for 2023 is projected at 485.4 million yuan, with a net profit of 133.71 million yuan [3][25][30]. Product Development - The company is focusing on high-performance hydraulic hoses and has introduced innovative products that have significantly improved its gross margin. The gross margin increased from 25.78% in 2021 to 38.00% in 2022, and is expected to reach 47.84% in 2023 [3][30]. Strategic Expansion - The company is expanding its product offerings to include high-pressure equipment and services, targeting various industries such as municipal engineering, food processing, and more. This strategic move is expected to open new growth avenues [3][21].