JIULI Hi-tech(SZ:002318) HTSC·2025-10-29 08:40Investment Rating - The report maintains a "Buy" rating for the company [6] Core Views - The company reported Q3 revenue of 3.642 billion RMB, a year-on-year increase of 57.46% and a quarter-on-quarter increase of 13.01%. The net profit attributable to the parent company was 434 million RMB, up 8.29% year-on-year but down 0.98% quarter-on-quarter. For the first three quarters, the company achieved revenue of 9.747 billion RMB, a year-on-year increase of 36.45%, and a net profit of 1.262 billion RMB, up 20.73% year-on-year. The stable profit in Q3 and the high dividend attribute are highlighted, with expectations for accelerated progress in high-end product development [1][4] Summary by Sections Financial Performance - In Q3, the company's gross margin was 22.07%, down 9.08 percentage points year-on-year and 4.33 percentage points quarter-on-quarter. The decline is attributed to seasonal variations in high-end product deliveries. Future gross margins are expected to stabilize and recover as high-end products continue to ramp up. The total expense ratio for Q3 was 9.07%, down 3.99 percentage points year-on-year and 0.89 percentage points quarter-on-quarter, indicating effective cost control. R&D expenses were 112 million RMB, down 6.88% quarter-on-quarter, while sales expenses were 133 million RMB, down 4.49% quarter-on-quarter. Additionally, investment income for Q3 was 90.596 million RMB, a 600.51% increase quarter-on-quarter, primarily from the disposal of equity in Yongxing Materials, supporting stable overall profits in Q3 [2] Business Strategy - The company's core business focuses on the R&D, production, and sales of industrial stainless steel pipes and special alloy pipes, fittings, flanges, bars, and wires, serving national strategic emerging industries such as oil and gas, nuclear power, thermal power, and aviation. The company is actively involved in key materials for controllable nuclear fusion, increasing R&D investment, and participating in related projects. It aims to achieve breakthroughs in material performance and manufacturing processes, while also forming specialized teams to enhance industry communication and collaboration, fostering technological innovation [3] Profit Forecast and Valuation - The report maintains profit forecasts for the company at 1.727 billion RMB, 1.857 billion RMB, and 2.004 billion RMB for 2025-2027, representing a three-year compound growth rate of 10.37%. Corresponding EPS is projected at 1.77 RMB, 1.90 RMB, and 2.05 RMB. The average PE ratio for comparable companies in 2026 is 15.1 times. Given the company's overseas project acquisitions and potential capacity increases in composite pipes, along with significant room for growth in high-end product ratios, a target PE of 17 times for 2026 is assigned, leading to a target price of 32.30 RMB [4][8]