Tiantai Xianghe(SH:603500) Southwest Securities·2024-04-01 16:00Investment Rating - The report gives a "Hold" rating for the company, with a current price of 10.60 yuan and a projected PE ratio of 28, 24, and 20 for the years 2024, 2025, and 2026 respectively [10][39]. Core Insights - The company, Xianghe Industrial (603500), is a leader in non-metallic fasteners for rail transit and has diversified its business into electronic components and polymer modified materials. The company has shown stable growth with a revenue of 640.66 million yuan in 2023, a year-on-year increase of 5.6% [10][19]. - The non-metallic fasteners business, which accounts for approximately 39.4% of total revenue, has seen a slight decline in revenue but an increase in gross margin to 47.0%, up 8.7 percentage points year-on-year [26][28]. - The electronic components segment generated revenue of 180 million yuan, growing by 12.0% year-on-year, while the polymer modified materials segment achieved revenue of 210 million yuan, a 9.9% increase [10][28]. Summary by Sections Business Overview - Xianghe Industrial focuses on three main sectors: non-metallic fasteners for rail transit, electronic components, and polymer modified materials. The company has actively participated in setting industry standards and has a comprehensive product line certified for high-speed rail and urban rail transit [46][25]. - The company has evolved from a non-metallic fastener supplier to an integrated supplier, enhancing its market competitiveness through strategic investments and acquisitions [22][46]. Financial Performance - In 2023, the company reported a net profit attributable to shareholders of 67.05 million yuan, reflecting a year-on-year increase of 0.8%. The comprehensive gross margin improved to 28.4%, up 2.7 percentage points from the previous year [10][32]. - The company’s revenue is projected to grow to 726.84 million yuan in 2024, with a compound annual growth rate (CAGR) of 24% for net profit from 2024 to 2026 [10][39]. Market Position and Future Outlook - The company is well-positioned to benefit from the ongoing expansion of rail infrastructure in China, with expected growth in demand for its products. The electronic components market is also anticipated to grow significantly, driven by national policies and increasing digital economy demands [10][36]. - The company maintains a stable governance structure with concentrated ownership, which supports its long-term strategic goals [34][58].