Core Viewpoint - The company is initiating coverage with an "Accumulate" rating and a target price of 52.20 yuan, based on a 2.00x PEG valuation for 2026. The unique high-return recycled preparation process allows the company to increase the usage ratio of recycled materials in products like GH4169 to 70%, reducing costs by approximately 30% compared to traditional processes. The company is expected to achieve a compound annual growth rate (CAGR) of 30.39% in revenue and 42.56% in net profit from 2020 to 2024, with a potential return to high growth starting in 2026 due to the ramp-up of high-margin military and commercial aerospace businesses [1][2]. Company Overview - The company is one of the few in China to achieve industrial application of recycled high-temperature alloys for aerospace engines. Its high-return recycling process significantly lowers costs while enhancing product performance, addressing the challenge of resource recycling in high-temperature alloys [2]. - The company has received certification from key clients such as China Aviation Engine Corporation and Aviation Industry Corporation of China, enabling bulk supply of its products [2]. Market Demand - The aerospace sector is experiencing strong demand due to military aircraft upgrades, the commercialization of domestic large aircraft, and rapid development in commercial aerospace. The gas turbine sector is also benefiting from accelerated domestic substitution, with the company's products certified by multiple gas turbine manufacturers. Additionally, the nuclear power sector is expected to see new growth points from the restart of third-generation nuclear power and demonstration projects for fourth-generation nuclear power [3]. - The company currently holds a market share of approximately 11%-13% in the domestic high-temperature alloy market, indicating significant growth potential given the industry's overall growth and the low penetration rate of recycled materials [3]. Cost Advantages - The company has a notable cost advantage in recycled materials, with a usage ratio of 70%-90% in high-temperature alloy production in the U.S. since the 1970s. In contrast, China's effective application rate for high-temperature alloys is only 10%-15%, with most waste being downgraded. The company's cost for high-temperature alloys is significantly lower than its competitors, with costs of 166,600 yuan/ton compared to 192,800 yuan/ton and 240,400 yuan/ton for its peers [4]. Differentiation from Market Views - The market underestimates the long-term growth potential from the introduction of special recycled material grades and emerging businesses like commercial aerospace. The company is positioned not just as a traditional supplier of high-temperature alloys but also as a provider of high-performance, low-cost domestic alternatives for high-end equipment manufacturing through its core technology [5]. Profit Forecast and Valuation - The company is projected to achieve net profits of 93 million yuan, 167 million yuan, and 231 million yuan in 2025, 2026, and 2027, respectively. Comparisons with leading domestic high-temperature alloy companies suggest an average PEG of 1.94 for 2026. Given the company's leadership in recycled high-temperature alloys, a PEG of 2.00 is assigned, with a projected CAGR of 58.12% in net profit for 2026-2027, supporting the target price of 52.20 yuan and an "Accumulate" rating [6].

Investment Rating - The report initiates coverage on the company with a "Buy" rating and sets a target price of 52.20 RMB, based on a PEG valuation of 2.00 times for 2026 [8]. Core Views - The company is positioned as a leader in high-temperature alloy recycling, with a unique high-return recycling process that increases the usage of recycled materials in products like GH4169 to 70%, reducing costs by approximately 30% compared to traditional methods [2][4]. - The company is expected to achieve a compound annual growth rate (CAGR) of 30.39% in revenue and 42.56% in net profit attributable to the parent company from 2020 to 2024, driven by strong demand in aerospace engine maintenance, commercial aerospace, and domestic gas turbine and nuclear power construction [1][2]. - Despite facing short-term pressure on performance in 2025 due to product structure adjustments and fluctuations in downstream demand, the company is anticipated to resume high growth starting in 2026 as high-margin military and commercial aerospace businesses ramp up [1][24]. Summary by Relevant Sections Company Overview - The company is one of the few in China to achieve industrial application of recycled high-temperature alloys for aerospace engines, addressing the challenge of resource recycling in high-temperature alloys [2][24]. - The company has a strong technical barrier and has received certifications from key clients such as China Aviation Engine Corporation and Aviation Industry Corporation of China, enabling mass supply [2][24]. Market Demand - The aerospace sector is experiencing robust demand due to military aircraft upgrades, the commercialization of domestic large aircraft, and rapid development in commercial aerospace [3]. - The gas turbine sector is accelerating domestic substitution, with the company's products already certified by multiple gas turbine manufacturers [3]. - The nuclear power sector is expected to see new growth points with the restart of third-generation nuclear power and demonstration projects for fourth-generation nuclear power [3]. Financial Projections and Valuation - The company is projected to achieve net profits of 0.93 billion RMB, 1.67 billion RMB, and 2.31 billion RMB for the years 2025 to 2027, respectively [6]. - The average PEG of comparable companies in the high-temperature alloy sector is 1.94, but the company is assigned a PEG of 2.00 due to its leadership position and scarcity in the market [6]. - The target price of 52.20 RMB corresponds to a CAGR of 58.12% in net profit attributable to the parent company for 2026-2027 [6]. Competitive Advantages - The company has a significant cost advantage due to its high-return recycling process, with a cost per ton of high-temperature alloy at 166,600 RMB, compared to 192,800 RMB and 240,400 RMB for competitors [4]. - The company is expected to benefit from the increasing penetration of recycled materials in the high-temperature alloy industry, which is currently low in China compared to international levels [3][4]. Growth Strategy - The company is not only a traditional supplier of high-temperature alloys but also provides high-performance, low-cost domestic alternatives through its core technology, targeting high-end equipment manufacturing [5][18]. - The company has made significant strides in expanding its overseas market presence, securing long-term supply agreements with leading international aerospace and petrochemical companies [19][20].

Core Viewpoint - The company has developed a high-temperature alloy recycling technology after over a decade of innovation, which enhances product quality, stability, cost control, and ensures the timely supply of strategic resources, aligning with the requirements of commercial aerospace for high-temperature alloy materials [1] Group 1 - The company has been exploring and innovating for more than ten years [1] - The self-developed technology focuses on the recycling of high-temperature alloy return materials [1] - The technology offers advantages in product quality improvement and stability control [1] Group 2 - The technology aids in cost control [1] - It ensures the timely supply of strategic resources [1] - The technology meets the quality and cost requirements of the commercial aerospace sector [1]