Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - The company experienced a decline in revenue and profit in the first three quarters of 2025, with revenue of 2.039 billion yuan, down 7.14% year-on-year, and a net profit of 400 million yuan, down 8.23% year-on-year [7][8] - The gross profit margin improved year-on-year, and the acquisition of the titanium alloy company is progressing smoothly [8] - The company is expected to benefit from the upgrade of domestic aircraft and the increasing global demand for civil aircraft, leading to a rapid development phase for its aviation products [10] Financial Performance Summary - For the first three quarters of 2025, the company reported a revenue of 2.039 billion yuan, a net profit of 400 million yuan, and a net profit margin of 19.62%, which is a decrease of 0.23 percentage points year-on-year [8] - The average return on equity (ROE) was 3.84%, down 0.46 percentage points year-on-year, while the sales gross margin was 31.14%, up 0.57 percentage points year-on-year [8] - In Q3 2025, the company achieved a revenue of 679 million yuan, a net profit of 120 million yuan, and a cash flow from operating activities of -135 million yuan [9] Revenue and Profit Forecast - The company is projected to generate revenues of 2.958 billion yuan, 3.526 billion yuan, and 4.178 billion yuan for the years 2025, 2026, and 2027 respectively, with corresponding net profits of 564 million yuan, 703 million yuan, and 854 million yuan [10][34]

Core Viewpoint - In the first half of 2025, the company experienced a decline in revenue due to fluctuations in customer demand, while maintaining a stable gross profit margin [1] Financial Performance - In H1 2025, the company reported operating revenue of 1.361 billion yuan, a year-on-year decrease of 9.87% - The net profit attributable to shareholders was 280 million yuan, down 9.92% year-on-year - The net profit excluding non-recurring items was 251 million yuan, a decrease of 7.64% year-on-year - The weighted average return on equity was 2.67%, down 0.40 percentage points year-on-year - The sales gross margin was 31.30%, an increase of 1.86 percentage points year-on-year, while the net profit margin was 20.59%, a slight decrease of 0.01 percentage points year-on-year [1] Product Segmentation - In H1 2025, revenue from aviation finished products was 633 million yuan, a decrease of 13.19% year-on-year, with a gross margin of 28.23%, down 9.74 percentage points - Revenue from basic materials was 607 million yuan, an increase of 6.22% year-on-year, with a gross margin of 34.39%, up 10.75 percentage points - Revenue from non-aviation finished products was 57 million yuan, a decrease of 65.13% year-on-year, with a gross margin of 12.08%, up 0.19 percentage points - Revenue from processing services was 54 million yuan, an increase of 47.83% year-on-year, with a gross margin of 41.38%, up 28.82 percentage points - The company plans to enhance market development in the gas turbine, trainer, and civil aircraft markets in H2 2025 [2] Quarterly Performance - In Q2 2025, the company achieved operating revenue of 708 million yuan, a year-on-year decrease of 14.83% but an increase of 8.40% quarter-on-quarter - The net profit attributable to shareholders was 146 million yuan, down 10.71% year-on-year but up 8.02% quarter-on-quarter - The sales gross margin was 32.96%, an increase of 4.26 percentage points year-on-year and 3.45 percentage points quarter-on-quarter - The sales net margin was 20.56%, up 0.95 percentage points year-on-year but down 0.07 percentage points quarter-on-quarter [2] Expense Analysis - In Q2 2025, the sales expense ratio was 0.67%, up 0.26 percentage points year-on-year and 0.09 percentage points quarter-on-quarter - The management expense ratio was 2.95%, up 0.92 percentage points year-on-year but down 0.33 percentage points quarter-on-quarter - The R&D expense ratio was 6.83%, up 0.38 percentage points year-on-year and 0.66 percentage points quarter-on-quarter - The financial expense ratio was -1.27%, down 0.55 percentage points year-on-year but up 0.55 percentage points quarter-on-quarter [3] Investment Activities - The company plans to use excess raised funds to acquire 77% and 23% stakes in Zhenjiang Titanium Alloy Company from the Aviation Materials Institute and Zhenjiang Low-altitude Industry Investment Co., respectively, for 540 million yuan - The acquisition aims to integrate titanium alloy precision casting business assets and enhance processing capacity - The company also plans to acquire intellectual property rights for six types of high-temperature alloy master alloys for 184 million yuan - Additionally, the company intends to purchase a 3-ton vacuum induction melting furnace and related equipment for 18.1652 million yuan [4] Profit Forecast - The company anticipates rapid growth in aviation products due to domestic aircraft upgrades, increased global demand for civil aircraft, and production ramp-up after certification - Revenue projections for 2025-2027 are 3.091 billion yuan, 3.682 billion yuan, and 4.359 billion yuan, respectively - Expected net profits for the same period are 617 million yuan, 755 million yuan, and 893 million yuan, with corresponding P/E ratios of 39, 32, and 27 - The investment rating has been upgraded to "Buy" [5]