CHINA TUNGSTEN HIGHT(SZ:000657) Minsheng Securities·2024-04-30 02:30Investment Rating - The report maintains a "Recommended" rating for the company, with expected net profits for 2024-2026 at 5.53 billion, 6.71 billion, and 8.22 billion respectively, corresponding to PE ratios of 27, 23, and 18 times [7][83]. Core Insights - The company experienced a slight decline in revenue and net profit in 2023, with revenue at 12.736 billion, down 2.63% year-on-year, and net profit at 485 million, down 9.35% year-on-year [29][31]. - The production of CNC blades reached approximately 140 million pieces in 2023, an increase of 7.69% year-on-year, accounting for about 20% of the domestic total production [5][34]. - The company is set to enhance its resource capabilities by acquiring the 100% equity of Shizhu Garden Company, which has rich tungsten resources, thereby forming a complete tungsten industry chain [58][80]. Financial Performance - In Q1 2024, the company reported revenue of 2.967 billion, a decrease of 2.95% year-on-year and 6.94% quarter-on-quarter, with a net profit of 64 million, down 35.97% year-on-year and 62.23% quarter-on-quarter [31][30]. - The gross profit margin for 2023 declined by 0.66 percentage points to 16.87%, influenced by rising raw material prices and poor price transmission in downstream products [3][44]. - The company anticipates a gradual recovery in demand and an increase in production capacity for CNC blades and PCB micro-drills, with a projected CAGR of 16.39% from 2021 to 2025 [82][90]. Production and Capacity Expansion - The company is implementing a "small steps, quick runs" strategy to gradually expand high-end tool production, with expectations to reach a CNC blade production of 200 million pieces by 2025 [82][90]. - The acquisition of Shizhu Garden is expected to significantly enhance the company's upstream resource capabilities, with the mine having a substantial tungsten resource reserve [58][80].