Investment Rating - The report initiates coverage with a "Buy" rating for the company [7][6] Core Insights - The company has a stable revenue growth trajectory, with total revenue increasing from 312 million yuan in 2017 to 585 million yuan in 2024, representing a CAGR of 9.38% [31][6] - The acquisition of the German company SMS is expected to enhance the company's capabilities in high-precision grinding machines and facilitate the mass production of screw rods, addressing existing technical bottlenecks [6][10] - The company is actively expanding its rolling functional components business, with revenue from linear guide products projected to grow significantly from 4.44 million yuan in 2022 to 34.91 million yuan in 2024 [6][9] Financial Data and Profit Forecast - Total revenue forecast for 2025 is 653 million yuan, with a year-on-year growth rate of 11.7% [5] - The net profit attributable to the parent company is expected to be 61 million yuan in 2025, reflecting a decrease of 30.6% compared to the previous year [5] - The company’s earnings per share (EPS) is projected to be 0.39 yuan in 2025, with a gross margin of 28.9% [5] Business Development and Strategy - The company has diversified its business from metal cutting tools to include intelligent CNC equipment and rolling functional components, enhancing its product matrix [6][17] - The strategic acquisition of SMS is aimed at strengthening the company's equipment capabilities and facilitating the mass production of screw rods, thereby improving operational efficiency [6][10] - The company is focusing on expanding its market presence in the rolling functional components sector, with significant growth expected in the coming years [9][6] Market Position and Competitive Landscape - The global cutting tool market is valued at over 260 billion yuan, with the company positioned to capitalize on the domestic market's growth potential [46][49] - The company has established a strong foothold in the domestic market, with its cutting tools accounting for over 80% of total revenue [33][37] - The company’s overseas revenue reached 47.61 million yuan in the first half of 2025, indicating a 20.62% year-on-year increase, showcasing its expanding international market presence [41][44]

Core Viewpoint - The company reported a revenue of 319.5 million yuan, a year-on-year increase of 6.85%, but net profit decreased by 22.53% to 43.11 million yuan due to rising expenses related to market expansion and strategic acquisitions [1] Group 1: Financial Performance - Revenue for the first half reached 319.5 million yuan, up 6.85% year-on-year [1] - Net profit was 43.11 million yuan, down 22.53% year-on-year, while the non-recurring net profit was 41.67 million yuan, down 24.64% year-on-year [1] - The decline in net profit has significantly narrowed in the second quarter compared to the first quarter, indicating a recovery in product profitability and overall operational efficiency [1] Group 2: Business Segments - The metal cutting tools segment generated revenue of 258.7 million yuan, remaining stable year-on-year, providing stable cash flow for emerging businesses [1] - The die-cutting tools business achieved revenue of 134.9 million yuan, maintaining the top global market share, while the saw blade business revenue was 123.8 million yuan, up 1.85% year-on-year [1] - New products such as lightweight die-cutting tools and carbide bi-metal band saw blades saw revenue growth of 17.97% and 58.25% respectively, driving high-quality growth in the metal cutting tools business [1] Group 3: Emerging Business Growth - The rolling functional components business experienced explosive growth with revenue of 40.87 million yuan, a year-on-year increase of 208.89% [2] - Revenue from linear guide and slider products grew by 153.39% and 236.80% respectively, with sales of linear guide sub-products aimed at mid-to-high-end users increasing by 758.27% [2] - The intelligent CNC equipment business is focusing on high-end transformation and reducing homogeneous competition by customizing metal processing solutions for strategic clients [2] Group 4: Strategic Acquisitions - The acquisition of SMS Maschinenbau GmbH in May 2025 is a significant highlight, enhancing the company's capabilities in high-precision thread grinding machines [2][3] - This acquisition fills a technological gap in the domestic ultra-high precision thread grinding machine sector, supporting the development and industrialization of rolling functional components [3] - The company aims to accelerate the localization of high-precision thread grinding machines and expand into high-end markets, contributing to the domestic substitution process in high-end equipment manufacturing [3]