CHIC(SH:601608) SINOLINK SECURITIES·2024-04-26 02:00Investment Rating - The report assigns a "Buy" rating to the company with a target price of 5.66 RMB based on a projected PE of 28 times for 2025 [85]. Core Viewpoints - The company is a leading domestic supplier of heavy machinery, experiencing a significant turnaround in net profit, which rose to 3.8 billion RMB in 2023, a year-on-year increase of 163.5% [5][84]. - The company has maintained positive revenue growth for seven consecutive years, with revenues increasing from 4.62 billion RMB in 2017 to 9.56 billion RMB in 2023 [84][137]. - The mining and heavy equipment sector is expected to remain robust due to high metal prices and increased capital expenditure from Chinese mining companies expanding overseas [84][91]. Summary by Sections Company Overview - The company has a long-standing presence in the mining and heavy equipment sector, with deep technical reserves and established relationships with major domestic and international clients [5][84]. - The company has improved its operating cash flow and reduced its debt-to-asset ratio from 63.9% in 2019 to 55.1% in 2023, indicating a healthier financial position [6][84]. Financial Performance - In 2023, the company's operating cash flow reached 12.0 billion RMB, reflecting strong operational capabilities [6][84]. - The company's contract liabilities increased to 2.03 billion RMB in 2023, a 143.3% increase compared to 2018, indicating strong demand in the market [10][178]. Market Dynamics - The mining machinery industry in China has shown steady growth, with revenues increasing from 263.5 billion RMB in 2021 to 315.1 billion RMB in 2023 [16][169]. - The company has a leading market share in large mining mills, with over 81% in China and 23% globally for mills with a diameter of over 6 meters [84][116]. Future Outlook - The company plans to expand its production capacity through a directed issuance of shares, aiming to alleviate production bottlenecks in high-end wear parts and panel boxes [164][179]. - The projected revenue for 2024-2026 is expected to be 11.09 billion RMB, 12.74 billion RMB, and 14.67 billion RMB, respectively, with net profits forecasted to grow significantly [85][110].