Neway CNC(SH:688697) SINOLINK SECURITIES·2025-04-29 02:05Investment Rating - The report maintains a "Buy" rating for the company, expecting a price increase of 5% to 15% over the next 6 to 12 months [5][12]. Core Views - The company reported a revenue of 569 million yuan in Q1 2025, a year-on-year increase of 3.8%, while the net profit attributable to shareholders decreased by 11.78% to 61 million yuan [2]. - The machine tool industry is facing intense competition and price pressure, leading to a decline in profit margins. The company's gross margin in Q1 2025 was 21.11%, down 4.84 percentage points year-on-year, and the net margin decreased by 1.9 percentage points to 10.78% [3]. - Positive industry data for January and February 2025 indicates a potential recovery, with a 12.1% year-on-year revenue growth in the metal cutting machine tool sector and a 26.2% increase in new orders [3]. - The company is expanding its production capacity with a new phase expected to launch in the first half of 2025, which will introduce new products with promising growth prospects [4]. Summary by Sections Performance Summary - Q1 2025 revenue was 569 million yuan, up 3.8% year-on-year; net profit was 61 million yuan, down 11.78% [2]. Operational Analysis - The machine tool industry saw a revenue decline of 5.2% in 2024, with total profits down 76.6% due to competitive pressures [3]. - The company's gross margin decreased to 21.11% in Q1 2025, reflecting the industry's pricing challenges [3]. - Positive trends in early 2025 suggest potential recovery in subsequent quarters, supported by government economic stimulus measures [3]. Capacity and Product Development - The company is progressing with its fourth phase of capacity expansion, expected to be operational in H1 2025, which will enhance its product offerings [4]. Profit Forecast and Valuation - Projected net profits for 2025, 2026, and 2027 are 370 million, 427 million, and 483 million yuan, respectively, with corresponding PE ratios of 18X, 15X, and 13X [5].