Core Insights - GH3230 high-temperature alloy wire is widely used in aerospace engines, gas turbines, and other high-temperature environments, known for its excellent heat resistance, corrosion resistance, and oxidation resistance [1][4] - The alloy's main components include nickel (approximately 60%), chromium (approximately 20%), cobalt (approximately 10%), molybdenum (approximately 3%), and aluminum (approximately 3%) [6] - GH3230 can operate stably within a temperature range of 800°C to 1000°C, with a tensile strength exceeding 700MPa at room temperature [4] Physical Properties - The alloy's high-temperature stability and mechanical performance are achieved through precise alloy design and smelting processes, adhering to ASTM B637 standards [3] - Heat treatment processes, including solution treatment and aging treatment, are crucial for enhancing the alloy's high-temperature performance and oxidation resistance [4] Industry Challenges - There are ongoing debates regarding the long-term oxidation resistance of GH3230 under continuous high-temperature operations, particularly in environments with high oxygen content [5] - The price of GH3230 alloy is influenced by fluctuations in raw material prices, with recent significant increases in nickel prices impacting production costs [5] - The current LME nickel spot price is approximately $18,500 per ton, while the Shanghai Nonferrous Metals Network quotes nickel at around ¥17,800 per ton [5] Application Considerations - GH3230 alloy wire has broad application prospects in high-temperature fields such as aerospace and energy, becoming a preferred material for many critical components [5] - Common misconceptions in material selection include neglecting the matching of alloy components, overlooking environmental factors affecting material performance, and blindly relying on standard materials [6]

Core Insights - The company reported a revenue of 630 million yuan for 1H25, representing a year-over-year increase of 24.4%, with a net profit attributable to shareholders of 120 million yuan, up 21.8% year-over-year [1] - The high-temperature alloy division is focusing on high-temperature alloy products for "two machines" and actively expanding its market presence [1] Financial Performance - In 2Q25, the company achieved a revenue of 290 million yuan, a year-over-year increase of 36.8%, with a net profit of 50 million yuan, up 44.9% year-over-year [1] - The gross margin for 1H25 decreased by 3.8 percentage points to 73.1%, while the net margin fell by 1.9 percentage points to 17.2% [1] - The decline in gross margin is attributed to the increased revenue share from lower-margin high-temperature alloy materials [1] Product Segmentation - High-temperature alloy materials generated a revenue of 160 million yuan in 1H25, a year-over-year increase of 73.3%, accounting for 26% of total revenue, with a gross margin decline of 7.18 percentage points to 25.7% [2] - The company has secured new clients in the gas turbine sector, including Shanghai Electric and Siemens, and has achieved its first international gas turbine orders [2] - Revenue from Jinshuangqi reached 310 million yuan, up 12.5% year-over-year, representing 49% of total revenue, with a gross margin increase of 1.91 percentage points to 89.9% [2] - Revenue from Dingjunsheng was 140 million yuan, a year-over-year increase of 17.5%, accounting for 23% of total revenue, with a gross margin increase of 1.97 percentage points to 92.9% [2] Operational Efficiency - The company improved its operating cash flow, reporting 6 million yuan for 1H25, compared to 3 million yuan in the same period last year [3] - The expense ratio decreased by 3.3 percentage points to 51.9%, with reductions in sales and management expense ratios [3] - Research and development expenses increased by 1.5 percentage points to 13.2%, indicating a commitment to enhancing R&D capabilities [3] Future Outlook - The company is one of the few private enterprises in China with the capability to develop high-temperature alloy materials and components across the entire process [4] - Projected net profits for 2025, 2026, and 2027 are estimated at 301 million yuan, 431 million yuan, and 579 million yuan, respectively, with corresponding price-to-earnings ratios of 29x, 20x, and 15x [4] - The company maintains a "recommended" rating based on its technological accumulation and engineering capabilities in the micro-ecology and high-temperature alloy sectors [4]

Group 1 - The article highlights the emergence of a trillion-level market driven by performance bottlenecks in the AI inference era, indicating that certain companies may become the biggest winners in the AI operational revolution [1] - It discusses the demand driven by gas turbines in the aviation engine and AI sectors, revealing a hidden champion in high-temperature alloys that has signed long-term agreements with multiple overseas clients, securing benefits from the global supply chain for aircraft engines [1]

Core Viewpoint - The article highlights the potential investment opportunities in companies providing AI server power supply solutions and those involved in high-temperature alloy demand driven by the AI and aerospace industries [1]. Group 1: AI Server Power Supply Solutions - The company offers a comprehensive range of products for AI servers, covering power supply units (PSU), inter-board connections (IBC), and point of load (POL) applications [1]. - Additionally, the company is developing various chips for robotics, electric drives, and sensors, indicating a broad technological focus [1]. Group 2: High-Temperature Alloy Demand - The company is strategically focusing on overseas markets, accelerating its entry into these regions [1]. - It has already signed long-term agreements with multiple overseas clients, showcasing its commitment to expanding its international footprint [1].

Investment Rating - The report gives an "Accumulate" rating for the company [4]. Core Views - The company is a rising star in the domestic high-temperature alloy sector, driven by increasing demand from the aerospace and gas turbine industries [2][4]. - The company focuses on high-temperature alloys and alloy materials, with a diverse range of products including cast and deformed high-temperature alloys and alloy pipes [2][4]. - The company is expected to achieve revenue and net profit growth in 2024, with revenue of 1.391 billion yuan and net profit of 66 million yuan, representing year-on-year growth of 15.22% and 19.38% respectively [2][4]. Summary by Sections Company Overview - The company specializes in high-temperature alloys and alloy materials, with products that cover military and civilian applications [2][4]. - The company aims to become a world-class high-temperature alloy manufacturer, having established production lines for both cast and deformed high-temperature alloys [19][20]. Market Demand - The demand for high-temperature alloys is expected to rise due to the growth in the aerospace engine and gas turbine markets, with global civil aviation showing promising prospects [2][40]. - The company is well-positioned to benefit from the restructuring of supply chains by overseas aerospace manufacturers, which presents opportunities for domestic suppliers [52]. Financial Projections - The company is projected to achieve revenues of 1.759 billion yuan in 2025, 2.209 billion yuan in 2026, and 2.736 billion yuan in 2027, with corresponding net profits of 115 million yuan, 173 million yuan, and 247 million yuan [3][14]. - The expected earnings per share (EPS) for 2025, 2026, and 2027 are 0.47 yuan, 0.70 yuan, and 1.00 yuan respectively [14]. International Expansion - The company is actively expanding its international customer base and has signed long-term agreements with several overseas clients, enhancing its global supply chain presence [2][30]. - The overseas revenue is expected to significantly contribute to the company's growth, with a projected increase of 128.69% in 2024 [30]. Product Segmentation - The company's revenue from high-temperature alloys and alloy pipes is expected to reach 959 million yuan and 346 million yuan respectively in 2024, with year-on-year growth of 18.97% and 15.97% [24]. - The aerospace sector is the core application area for the company's products, with significant revenue contributions from aerospace, gas turbines, and automotive sectors [28].

Investment Rating - The report maintains a "Recommended" rating for the company [4][6]. Core Views - The company reported a revenue of 599 million yuan for the first half of 2025, a year-over-year decrease of 18.2%, with a net profit attributable to shareholders of 93 million yuan, down 51.4% year-over-year [1]. - The company is one of the few in China capable of mass-producing both deformed high-temperature alloys and cast high-temperature alloys, indicating a strong position in the market [1]. - The company is expanding its subsidiary, Tunan Intelligent Manufacturing, which is expected to enhance its production capabilities and extend its industrial chain [2]. Summary by Sections Financial Performance - In Q2 2025, the company achieved a revenue of 310 million yuan, a year-over-year decrease of 18.0% but a quarter-over-quarter increase of 9.5%. The net profit for the same quarter was 50 million yuan, down 49.0% year-over-year but up 23.0% quarter-over-quarter [1]. - The gross margin for the first half of 2025 decreased by 10.4 percentage points to 27.9%, while the net margin fell by 10.6 percentage points to 15.5% [1]. - The company’s revenue from deformed high-temperature alloys was 280 million yuan, a slight decrease of 0.2% year-over-year, while revenue from cast high-temperature alloys was 170 million yuan, down 39.6% year-over-year [2]. Cost and Expenses - The overall expense ratio remained stable, with a slight increase in the period expense ratio by 1.2 percentage points to 9.4% in the first half of 2025 [3]. - The company recorded an asset impairment loss of 11 million yuan, compared to no loss in the same period last year [3]. Future Outlook - The company is expected to generate net profits of 300 million yuan, 350 million yuan, and 420 million yuan for the years 2025, 2026, and 2027, respectively [4]. - The current stock price corresponds to a price-to-earnings ratio (PE) of 40x for 2025, 34x for 2026, and 29x for 2027, reflecting a favorable valuation given the company's industry position and expansion plans [4].

Core Viewpoint - The successful development and acceptance of the "Xinghe-700" high-temperature alloy turbine disc marks a significant breakthrough for China in the aerospace industry, overcoming Western technological barriers and restrictions [1][3][36] Group 1: Product Development and Features - The "Xinghe-700" turbine disc can withstand temperatures of 700°C, which is a critical threshold in the aerospace sector, although it still lags behind Western products that can operate at 750°C [23][30] - The internal structure of the "Xinghe-700" is finely tuned with micron-level precision, enhancing material stability and fatigue resistance [26] - The disc features a preliminary "self-healing" capability, where intelligent elements within the material can migrate to repair micro-cracks, extending its lifespan by over 30% compared to imported products [28] - The manufacturing cost of the "Xinghe-700" is nearly half that of imported alternatives, achieved through comprehensive independent research and development [30] Group 2: Historical Context and Industry Impact - The development of the "Xinghe-700" represents nearly 70 years of progress in China's industrial capabilities, transitioning from imitation to innovation in high-temperature alloy production [34][36] - The successful creation of the "Xinghe-700" has led to advancements in the entire industry, with new nickel-based alloy blades achieving temperature records of 1150°C [32] - The project reflects China's resilience against technological blockades, showcasing the nation's ability to turn challenges into opportunities for growth and innovation in high-end manufacturing [38]

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the **chromium metal industry**, highlighting the surge in demand driven by **AI data centers**, **commercial aircraft**, and **European military needs**. The industry is expected to face a significant supply-demand gap, projected to reach **280,000 tons by 2028** due to limited capacity expansion caused by safety concerns [2][3]. Core Insights and Arguments - **Gas Turbine Demand**: The demand for gas turbines is rapidly increasing, primarily benefiting from the construction of AI data centers. The delivery volume is expected to grow by approximately **70% year-on-year in the second half of 2026** [2][4]. - **Commercial Aircraft Engine Orders**: There has been a substantial increase in commercial aircraft engine orders, but the delivery cycle is lengthy. The global commercial aircraft fleet is projected to grow from **1,266 aircraft in 2024 to 2,800 by 2028**, with a maintenance ratio of **40%-50%** [4][24]. - **European Military Orders**: European military orders are increasing, with Rheinmetall's military orders rising from **€23 billion to €60-105 billion**. However, this demand has limited impact on domestic chromium metal consumption [5][27]. Production and Profitability Expectations - **Zhenhua Co. Production Forecast**: Zhenhua Co. anticipates a steady increase in production from **940,000 tons in 2024 to 1,060,000 tons by 2028**. The net profit is expected to rise from **¥770 million in 2025 to ¥1.3 billion in 2027**, with a valuation level of **7.8 times** [2][7]. - **Chromium Price Trends**: The price of chromium metal is closely linked to the price of chromium ore. Recent price declines are attributed to raw material price drops and seasonal factors, but the price of chromium oxide remains stable, indicating a tighter market for certain products [8][37]. Supply Chain Dynamics - **Global Supply Chain Expansion**: Overseas companies like Siemens Energy and Mitsubishi Power are expanding gas turbine production capacity, while Chinese suppliers are entering the global supply chain. Exports from the chromium industry have increased by **64% year-on-year** in the first half of the year [2][6]. - **Complexity in Production**: The production process from chromium ore to chromium metal is complex, particularly in handling sodium chromate and sodium dichromate due to the hazardous nature of hexavalent chromium waste [10]. Market Position and Future Outlook - **Global Chromium Production**: Global chromium production capacity is approximately **1.07 million tons**, with China accounting for **520,000 tons**. Major producing countries include Kazakhstan, Turkey, and South Africa [11][35]. - **Zhenhua Co. Future Prospects**: Zhenhua Co. plans to expand its capacity significantly, potentially increasing production by **40%** through acquisitions and operational improvements. The company is expected to generate substantial free cash flow and improve return rates [36]. Additional Insights - **High-Temperature Alloy Applications**: Chromium metal is widely used in high-temperature alloys for gas turbines and aircraft engines, with a growing demand expected in the coming years [13][14]. - **Export Growth**: China's chromium powder exports have surged, with a notable increase from **1,300 tons in 2022 to 19,000 tons in the first quarter of 2025** [34]. This summary encapsulates the critical points discussed in the conference call, providing a comprehensive overview of the chromium metal industry, its dynamics, and future expectations.

Investment Rating - The report maintains a "Buy" rating for the company [2] Core Insights - The chromium salt industry is expected to undergo a significant restructuring due to surging demand from the overseas gas turbine and military sectors, which will drive up the demand for metallic chromium [9][10][11] - The global demand for chromium salts is projected to grow from 930,000 tons in 2024 to 1,310,000 tons by 2028, representing a substantial increase [10][12] - The company is well-positioned to benefit from the upcoming chromium salt market cycle due to its competitive advantages in production capacity and technology [10][11][14] Market Data - As of July 30, 2025, the company's current stock price is 14.41 yuan, with a total market capitalization of approximately 10,242.06 million yuan [6] - The company holds about 24% of the global chromium salt production capacity, indicating a strong market position [31][32] Demand Analysis - The demand for metallic chromium is expected to double from 23,000 tons in 2024 to 49,700 tons by 2028, driven by increased orders for gas turbines and commercial aircraft engines [11][13] - The military and aerospace sectors are also anticipated to see significant growth, with NATO countries committing to increase defense spending [11][12] Supply Analysis - The supply of chromium salts is constrained due to strict environmental regulations and the difficulty of expanding production capacity globally [10][30] - The report highlights that the chromium salt industry is facing a projected supply-demand gap of approximately 250,000 tons by 2028 [10][12] Financial Forecast - The company is expected to achieve revenues of 45.70 billion yuan, 53.88 billion yuan, and 61.81 billion yuan for the years 2025, 2026, and 2027 respectively, with corresponding net profits of 7.66 billion yuan, 10.05 billion yuan, and 13.34 billion yuan [14][16]

Group 1 - The stock price of Zhongzhou Special Materials on July 29 was 19.89 yuan, down 2.79% from the previous trading day [1] - The trading volume on that day was 289,852 hands, with a transaction amount of 574 million yuan [1] - Zhongzhou Special Materials is primarily engaged in the research, production, and sales of high-temperature alloy materials, with products including cast high-temperature alloys, deformed high-temperature alloys, and special alloy welding materials, covering over 30 countries and regions globally [1] Group 2 - On July 29, the company stated on its interactive platform that it has a long-term commitment to the high-temperature alloy market, possessing technological accumulation and competitive advantages in product research and production [1] - The company is recognized as one of the enterprises with a rich product chain and comprehensive certification qualifications in the domestic high-temperature alloy industry [1] - On the same day, the net outflow of main funds was 84.81 million yuan, accounting for 1.47% of the circulating market value [1]