Investment Rating - The investment rating for the company is "Buy" and is maintained [6] Core Insights - In Q3 2025, the company achieved operating revenue of 12.823 billion yuan, a quarter-on-quarter increase of 18.71% and a year-on-year increase of 39.27%. The net profit attributable to shareholders was 810 million yuan, with a quarter-on-quarter increase of 39.3% and a year-on-year increase of 109.85%. The net profit after deducting non-recurring gains and losses was 792 million yuan, with a quarter-on-quarter increase of 42.67% and a year-on-year increase of 114.05%. The strong performance reflects the company's resource profitability elasticity and competitive positioning in the downstream industry chain [2][4] Summary by Sections Revenue and Profitability - The company reported operating revenue of 12.823 billion yuan in Q3 2025, with a quarter-on-quarter growth of 18.71% and a year-on-year growth of 39.27% [2][4] - The net profit attributable to shareholders reached 810 million yuan, marking a quarter-on-quarter increase of 39.3% and a year-on-year increase of 109.85% [2][4] - The net profit after deducting non-recurring items was 792 million yuan, with a quarter-on-quarter increase of 42.67% and a year-on-year increase of 114.05% [2][4] Segment Performance - The tungsten and molybdenum segment generated revenue of 5.7 billion yuan in Q3 2025, with a quarter-on-quarter increase of 19% and a profit of 1.058 billion yuan, reflecting a quarter-on-quarter increase of 43% [11] - The energy new materials segment achieved revenue of 5.525 billion yuan, with a quarter-on-quarter increase of 21% and a profit of 273 million yuan, marking a quarter-on-quarter increase of 27% [11] - The rare earth magnetic materials segment reported revenue of 1.579 billion yuan, with a quarter-on-quarter increase of 11% and a profit of 60 million yuan, reflecting a quarter-on-quarter increase of 2% [11]

Core Viewpoint - On November 11, Xinyi Co., Ltd. experienced a slight decline of 0.43% in stock price, with a trading volume of 242 million yuan, indicating a mixed market sentiment towards the company [1]. Financing Summary - On November 11, Xinyi Co. recorded a financing purchase amount of 47.08 million yuan, while the financing repayment was 53.67 million yuan, resulting in a net financing outflow of 6.58 million yuan [1]. - The total financing and securities balance for Xinyi Co. reached 295 million yuan, accounting for 4.24% of its circulating market value, which is above the 90th percentile level over the past year, indicating a high financing level [1]. - There were no shares sold or repaid in the securities lending market on the same day, with a total securities lending balance of 0 yuan, also reflecting a high level compared to the past year [1]. Business Performance - As of September 30, Xinyi Co. had 8,295 shareholders, an increase of 12.63% from the previous period, while the average circulating shares per person decreased by 11.21% to 30,428 shares [2]. - For the period from January to September 2025, Xinyi Co. achieved a revenue of 1.789 billion yuan, representing a year-on-year growth of 32.11%, and a net profit attributable to shareholders of 165 million yuan, up 22.68% year-on-year [2]. Dividend and Shareholding Structure - Since its A-share listing, Xinyi Co. has distributed a total of 218 million yuan in dividends, with 172 million yuan distributed over the past three years [3]. - As of September 30, 2025, among the top ten circulating shareholders, Huaxia Stable Growth Mixed Fund held 3.2985 million shares, a decrease of 375,200 shares from the previous period, while Nuoan Pioneer Mixed A Fund has exited the top ten list [3].

Core Insights - The company has over 40 years of experience in the special steel industry and has successfully transformed from a cutting tool manufacturer to a leading international high-end materials enterprise covering four major segments: high-speed steel, tool steel, cutting tools, and titanium alloys [1] - The company exhibits strong profitability and effective cost management, with stable gross and net profit margins, and maintains high R&D investment to support long-term growth [1] - The tool steel segment is a cornerstone for the company, holding the largest global market share in tool steel and high-speed steel, providing stable cash flow and strong risk resistance [1] - The titanium alloy business is positioned to capture emerging demand in high-value sectors, particularly in consumer electronics, which is expected to drive future revenue growth despite short-term demand fluctuations [2] - Powder metallurgy technology is identified as a foundational capability for entering strategic new materials and high-end manufacturing sectors, potentially enhancing both performance and valuation [3] - The company is expected to achieve significant revenue and profit growth in the coming years, with projections of revenues reaching 49.41 billion, 56.99 billion, and 65.45 billion yuan for 2025, 2026, and 2027 respectively, alongside net profits of 4.31 billion, 6.20 billion, and 8.50 billion yuan [4] Financial Performance - The company is projected to achieve revenue growth rates of 2.2%, 15.3%, and 14.8% for the years 2025, 2026, and 2027 respectively [4] - The expected net profit growth rates are 20.0%, 43.9%, and 37.2% for the same years [4] - The company’s 2026 price-to-earnings (PE) ratio is estimated at 12X, which is below the industry average PE of 37X, indicating potential undervaluation [4]

Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [5][9]. Core Insights - The company is a leading player in the global tool steel sector, with a solid foundation for sustainable profitability. It has made breakthroughs in powder metallurgy and titanium alloy technologies, positioning itself in high-growth sectors such as integrated die-casting for electric vehicles, consumer electronics, and aerospace, establishing a clear second growth curve [6][9]. - Revenue projections for 2025, 2026, and 2027 are estimated at 49.41 billion, 56.99 billion, and 65.45 billion RMB, respectively, with year-on-year growth rates of 2.2%, 15.3%, and 14.8%. Corresponding net profits are projected at 4.31 billion, 6.20 billion, and 8.50 billion RMB, with growth rates of 20.0%, 43.9%, and 37.2% [6][9]. Summary by Sections Market Performance - As of October 28, 2025, the closing price is 3.05 HKD, with a market capitalization of 8,311.25 million HKD. The stock has seen a one-year high of 3.28 HKD and a low of 1.65 HKD [3]. Business Overview - The company has been in the special steel industry for over 40 years, evolving from a cutting tool manufacturer to a leader in high-end materials, covering high-speed steel, tool steel, cutting tools, and titanium alloys [8][18]. - The company has a concentrated and stable shareholding structure, with the Zhu family as the actual controllers, ensuring strategic execution continuity [8][17]. Financial Performance - The company reported a revenue of 5,163.31 million RMB in 2023, with a projected decline in 2024 followed by a recovery in subsequent years. The gross profit margin and net profit margin have remained stable, supported by high R&D investment [7][31]. - The first half of 2025 saw a revenue decline of 7.1% year-on-year, attributed to reduced exports and lower demand from consumer electronics. However, net profit increased by 10.4% due to favorable currency exchange rates and improved gross margins in tool steel [22][23]. Growth Drivers - The company’s core business in tool steel is expected to enter an upward cycle, driven by domestic demand recovery and import substitution in high-end materials [8][22]. - The titanium alloy business is positioned to benefit from expanding demand in consumer electronics and aerospace, with significant growth potential as the market evolves [8][37]. Technological Advancements - The company has successfully established a powder metallurgy production line, filling a domestic gap in the large-scale production of tool steel, and is expected to lead in domestic substitution efforts [15][18]. - Ongoing R&D efforts have resulted in numerous innovations, including high-nitrogen alloy materials and advanced titanium products, enhancing the company's competitive edge in high-end manufacturing [31][34].

Core Viewpoint - The recent trading activity and financial performance of Xinrui Co., Ltd. indicate a strong position in the market, with significant financing activity and positive revenue growth. Financing Activity - On October 24, Xinrui Co., Ltd. saw a financing buy-in amount of 22.96 million yuan, with a net financing buy of 9.86 million yuan, leading to a total financing balance of 311 million yuan, which accounts for 5.43% of its market capitalization [1] - The financing balance is above the 90th percentile level over the past year, indicating a high level of investor interest [1] Shareholder Information - As of June 30, the number of shareholders for Xinrui Co., Ltd. increased by 5.47% to 7,365, with an average of 34,271 circulating shares per person, reflecting an increase of 80.31% [2] - The company has distributed a total of 218 million yuan in dividends since its A-share listing, with 172 million yuan distributed over the past three years [3] Financial Performance - For the first half of 2025, Xinrui Co., Ltd. reported a revenue of 1.14 billion yuan, representing a year-on-year growth of 28.97%, and a net profit attributable to shareholders of 101 million yuan, up 2.88% year-on-year [2] Institutional Holdings - As of June 30, 2025, notable institutional shareholders include Nuoan Pioneer Mixed A, which increased its holdings by 1.82 million shares, and Huaxia Stable Growth Mixed, which added 823,800 shares [3]

Core Viewpoint - The company reported significant growth in revenue and net profit for the first three quarters of 2025, indicating strong performance across various business segments, particularly in tungsten-molybdenum and new energy materials [6][7][8]. Financial Performance - For the first three quarters of 2025, the company achieved consolidated operating revenue of 32 billion yuan, a year-on-year increase of 21.36% [6]. - The net profit attributable to shareholders was 1.782 billion yuan, up 27.05% year-on-year, while the net profit excluding non-recurring gains and losses was 1.715 billion yuan, reflecting a 39.63% increase [6]. Business Segments - **Tungsten-Molybdenum Business**: Revenue reached 14.568 billion yuan, a growth of 11.47%, with total profit of 2.325 billion yuan, up 20.13%. The third quarter saw a quarter-on-quarter profit increase of 42.84% [6][7]. - **New Energy Materials**: Revenue from this segment was 13.059 billion yuan, growing by 29.80%, with total profit of 612 million yuan, an increase of 48.93%. Lithium cobalt oxide sales rose by 45% [7]. - **Rare Earth Business**: Revenue was 4.333 billion yuan, up 35.27%, with total profit of 185 million yuan, a 2.74% increase. Excluding the previous year's one-time gains, profit growth was 35.83% [8]. - **Real Estate Business**: Revenue was 40 million yuan, a 15.19% increase, but total profit was a loss of 62 million yuan, down 1.3 million yuan from the previous year due to the absence of one-time gains [8]. Corporate Actions - The company approved a plan to establish a wholly-owned subsidiary for the construction of a metal cutting solution engineering center, with an investment of 387.86 million yuan, aimed at enhancing service capabilities in the cutting tool sector [17][18]. - The board also approved the use of 1.6 billion yuan of temporarily idle funds for wealth management, focusing on high-security, liquid investments [24][26]. Governance and Compliance - The board confirmed that all financial reports are accurate and complete, with no significant omissions or misleading statements [2][3]. - The company has adhered to necessary procedures for the approval of financial and investment decisions, ensuring compliance with relevant regulations [30][31].

Financial Data and Key Metrics Changes - The company reported a GAAP EPS of $1.01, up from $0.99 in the prior year's quarter, with adjusted EPS growing nearly 6% to $1.09 from $1.03 [11] - Average daily sales improved by 2.7% year-over-year in the fourth quarter, marking a return to growth in the core customer base [8][9] - Gross margin for the fourth quarter was 40.4%, down 60 basis points year-over-year and sequentially, primarily due to tariff-driven purchase cost escalation [9][10] - For the fiscal year, average daily sales declined 1.3% year-over-year, with a gross margin of 40.8%, contracting 40 basis points compared to the prior year [14][15] Business Line Data and Key Metrics Changes - Core customer daily sales improved by 4.1% year-over-year, while national accounts declined by 0.7% year-over-year [17] - Public sector sales grew by 8.5% year-over-year and 10% sequentially, although there was a negative impact from the government shutdown in October [17][18] - The installed vending count grew by 10% year-over-year, with average daily sales from vending up 10% year-over-year, representing approximately 19% of total company sales [18][19] Market Data and Key Metrics Changes - The company noted stabilization in end markets such as aerospace, while heavy equipment and agriculture markets showed signs of stabilization after being weak for two years [12][13] - Average daily sales in the quarter outpaced the industrial production index, supported by improved core customer performance and strength in the public sector [13] Company Strategy and Development Direction - The company aims to maintain momentum in high-touch solutions, re-energize the core customer base, and optimize cost to serve [5][6] - Initiatives include realigning public-facing web pricing, upgrading e-commerce experience, and enhancing marketing efforts [7][8] - The leadership transition is expected to strengthen the company's commitment to growth and customer experience [22][29] Management's Comments on Operating Environment and Future Outlook - The management characterized the operating environment as stable with pockets of improvement, despite ongoing uncertainty due to tariffs and inflation [12] - The company expects average daily sales growth of 3.5%-4.5% year-over-year for the first quarter of fiscal 2026, depending on the duration of the government shutdown [23] - Adjusted operating margin is expected to be in the range of 8.0%-8.6%, with gross margin improving from fourth quarter levels [24] Other Important Information - The company maintained a healthy balance sheet with net debt of approximately $430 million, representing roughly 1.1x EBITDA [15][16] - Free cash flow for the fourth quarter was $58 million, representing 104% of net income, with a free cash flow conversion of 122% for the fiscal year [15][16] Q&A Session Summary Question: Can you discuss the unusual surge in supplier price increases and how it was addressed? - Management noted that the concentration of price increases was unusual and occurred in a short time frame, leading to higher costs than anticipated. They have since taken pricing actions to address this [39][42] Question: What are the expectations for gross margins and SG&A as a percentage of sales? - Management expects gross margins to stabilize and incremental margins to improve throughout the year, with SG&A growth driven by necessary investments in marketing and operational efficiency [46][70] Question: How is the government shutdown impacting the business? - The public sector experienced strong growth in the fourth quarter, but sales growth turned negative in October due to the shutdown. Management expects this to be temporary [77][78] Question: What is the company's federal government exposure and its impact? - The company has about two-thirds of its government exposure in federal contracts, primarily in military and defense, with some pockets experiencing significant pullback [89][91] Question: Can you provide insights on pricing increases across product categories? - Management indicated that inflation is more pronounced in products sourced from China and those made of steel, with fasteners and OEM products seeing high levels of inflation [92]

Financial Data and Key Metrics Changes - The company reported a GAAP EPS of $1.01, up from $0.99 in the prior year's quarter, with adjusted EPS growing nearly 6% to $1.09 from $1.03 [11] - Average daily sales improved by 2.7% year over year, marking a return to growth in the core customer base [8][9] - Gross margin was reported at 40.4%, declining 60 basis points year over year and sequentially, primarily due to tariff-driven purchase cost escalation [9][10] Business Line Data and Key Metrics Changes - Core customer daily sales improved by 4.1% year over year, driven by both price and volume, while national accounts declined by 0.7% year over year [17] - Public sector sales grew by 8.5% year over year and 10% sequentially, although there was a negative impact from the government shutdown in October [17][18] - The installed vending count grew by 10% year over year, with average daily sales for vending also up 10% year over year [18] Market Data and Key Metrics Changes - The company noted stabilization in end markets such as aerospace and heavy equipment, while some areas like heavy truck remain soft [12][13] - Average daily sales in the quarter outpaced the Industrial Production Index, supported by improved core customer performance and public sector strength [13] Company Strategy and Development Direction - The company aims to maintain momentum in high-touch solutions, re-energize the core customer base, and optimize cost to serve [5][6] - A focus on productivity improvements is expected to yield annualized savings of $10 million to $15 million [8] - The leadership transition is seen as a strategic move to strengthen growth and customer experience [22][29] Management's Comments on Operating Environment and Future Outlook - The management characterized the operating environment as stable with pockets of improvement, despite ongoing uncertainty [12] - Expectations for fiscal 2026 include average daily sales growth of 3.5% to 4.5% year over year, with adjusted operating margins projected between 8.0% and 8.6% [23][24] - The company anticipates a step-up in operating expenses but expects productivity initiatives to build throughout the year [24][27] Other Important Information - The company returned $229 million to shareholders in the fiscal year through share repurchases and dividends [16] - The leadership team has undergone changes to enhance sales and customer experience, with new appointments aimed at driving growth [22][32] Q&A Session Summary Question: Can you discuss the unusual surge in supplier price increases? - Management acknowledged the unusual concentration of price increases and noted that they have taken appropriate pricing actions to address it [39][40][42] Question: What are the expectations for gross margins and SG&A as a percentage of sales? - Management expects gross margins to stabilize and incremental margins to improve throughout the year, with SG&A growth driven by necessary investments [46][47] Question: How is the government shutdown impacting the business? - The company has seen a decline in public sector sales due to the shutdown but remains optimistic about future recovery once it ends [77][78] Question: What is the outlook for headcount in fiscal 2026? - The company is focused on optimizing its workforce and improving performance metrics, with a commitment to self-help initiatives [86] Question: Can you provide insights on pricing strategies for 2026? - Management indicated uncertainty in pricing but aims to meet inflation through strategic pricing actions [67][68]

Summary of Tian Gong International Conference Call Company Overview - Tian Gong International focuses on high-end equipment materials, including tool steel, high-speed steel, cutting tools, and titanium alloys, with product prices significantly higher than ordinary alloy steels, targeting the high-end market and entering downstream applications such as new energy vehicles [2][3][10] Key Points and Arguments Growth Potential - The company's future growth hinges on breakthroughs in powder materials technology, which could replace traditional materials. The selling price of powder materials is approximately 7.5 times that of traditional materials, with potential annual revenue of 1.5 billion RMB if 10,000 tons of production capacity is achieved [2][3][10] - The stock price has increased by about 50% from 2 RMB to nearly 3 RMB since mid-August, reflecting market confidence in the company's growth logic and potential [3][10] Nuclear Fusion Sector - Tian Gong International is actively involved in the nuclear fusion sector, participating in key projects like the Shanghai HL-4 and Hefei EAST, with leading advantages in critical materials such as low-activation martensitic steel [2][5][7] - The company has developed boron steel and low-activation martensitic steel, with significant revenue potential from these materials in nuclear fusion applications, estimated to bring in tens of millions to billions of RMB [5][7] Demand in Humanoid Robotics - There is a strong demand for powder steel materials in the humanoid robotics sector, particularly for manufacturing screw and harmonic reducers. The company has partnered with several enterprises and received government validation, indicating a promising market outlook [2][8] Titanium Alloy Market - The titanium alloy market is expected to grow significantly, especially with potential increased usage in Apple's future products. The company is also investing in 3D printing technology for titanium alloys to reduce costs and enhance competitiveness [2][9] Additional Important Insights - The company's current valuation is low, with a TTM P/E ratio of about 1, and management has been actively buying shares, indicating confidence in future growth [3][10][11] - The company is positioned across multiple high-potential sectors, including nuclear fusion, humanoid robotics, and titanium alloys, which could lead to substantial business growth and profitability [11][12] - Upcoming developments in the second half of the year, including new projects in nuclear fusion and humanoid robotics, are expected to drive positive momentum for the company [13][14] Investment Outlook - The current investment climate is favorable, with expectations for the company's stock price to potentially double. The projected valuation for 2026 is between 15 to 20 times earnings, indicating significant upside potential [12][15]

Core Viewpoint - The company Xinrui Co., Ltd. has shown fluctuations in its stock performance and financing activities, with significant growth in revenue and net profit year-on-year, indicating potential investment opportunities and a strong market presence [1][2]. Financing Activities - On September 25, Xinrui Co., Ltd. experienced a slight decline in stock price by 0.19%, with a trading volume of 96.1 million yuan. The financing buy-in amounted to 12.93 million yuan, while financing repayment was 13.87 million yuan, resulting in a net financing outflow of 0.94 million yuan [1]. - As of September 25, the total financing and securities balance for Xinrui Co., Ltd. was 238 million yuan, which represents 4.55% of its circulating market value, indicating a high level of financing activity compared to the past year [1]. Business Performance - For the first half of 2025, Xinrui Co., Ltd. reported a revenue of 1.14 billion yuan, reflecting a year-on-year growth of 28.97%. The net profit attributable to shareholders was 101 million yuan, showing a modest increase of 2.88% compared to the previous year [2]. - The company's main business revenue composition includes rock drilling tools and related services (46.46%), hard alloys (26.79%), cutting tools (14.12%), oil service products (7.46%), and other supplementary products (3.44%) [1]. Shareholder Information - As of June 30, 2025, the number of shareholders for Xinrui Co., Ltd. was 7,365, an increase of 5.47% from the previous period. The average circulating shares per person rose by 80.31% to 34,271 shares [2]. - The company has distributed a total of 218 million yuan in dividends since its A-share listing, with 172 million yuan distributed over the past three years [3]. Institutional Holdings - As of June 30, 2025, among the top ten circulating shareholders, the Noan Pioneer Mixed Fund (320003) held 4.86 million shares, an increase of 1.82 million shares from the previous period. The Huaxia Stable Growth Mixed Fund (519029) held 3.67 million shares, increasing by 0.82 million shares [3].