Huafon Aluminium(SH:601702) Orient Securities·2025-08-24 12:32Investment Rating - The report maintains a "Buy" rating for the company with a target price of 22.95 CNY based on a 17x P/E ratio for 2025 [3][7]. Core Views - The company has shown improvement in operating cash flow and has a promising outlook in the liquid cooling market, particularly in air conditioning and energy storage applications [11]. - The company has adjusted its earnings per share (EPS) forecasts for 2025-2027 to 1.35, 1.77, and 2.18 CNY respectively, reflecting a strategic response to current industry conditions [3]. Financial Performance - The company’s revenue is projected to grow from 9,291 million CNY in 2023 to 16,469 million CNY in 2027, with a compound annual growth rate (CAGR) of approximately 12.7% [5]. - Operating profit is expected to increase from 1,013 million CNY in 2023 to 2,382 million CNY in 2027, indicating a strong growth trajectory [5]. - The net profit attributable to the parent company is forecasted to rise from 899 million CNY in 2023 to 2,179 million CNY in 2027, with a notable growth rate of 35.1% in 2024 [5]. - The company’s gross margin is expected to improve from 15.9% in 2023 to 18.1% in 2027, while the net margin is projected to increase from 9.7% to 13.2% over the same period [5]. Market Position and Strategy - The company is focusing on product innovation and has made significant advancements in research and development, including obtaining new patents and government subsidies [11]. - The strategic emphasis on high-strength, corrosion-resistant composite cooling plates and other innovative products positions the company well in emerging markets [11]. - The report highlights the potential of liquid cooling solutions in data centers and energy storage, which are expected to positively impact the company's processing fees in the future [11].