Core Viewpoint - 华秦科技 reported a revenue of 1.139 billion yuan for 2024, representing a year-on-year increase of 24.17%, and a net profit attributable to shareholders of 414 million yuan, up 23.56% year-on-year. The Q4 performance showed a revenue of 401 million yuan, a year-on-year increase of 27.27% and a quarter-on-quarter increase of 58.92% [1] Revenue and Profit Analysis - The company achieved revenue growth across all business segments, with special functional materials generating 1.023 billion yuan, a year-on-year increase of 15.27%, and a gross margin of 55.12%, down 4.01 percentage points [2] - Acoustic metamaterials and instruments generated 44 million yuan, up 143.33% year-on-year, with a gross margin of 21.19%, down 11.05 percentage points [2] - Aerospace component processing revenue reached 62 million yuan, a significant increase of 461.84% year-on-year, with a gross margin of 12.76%, up 19.34 percentage points [2] - The newly introduced ceramic matrix composites generated 200.88 thousand yuan with a gross margin of 24.67% [2] - The overall gross margin for the company in 2024 was 50.69%, down 7.09 percentage points, primarily due to underutilization of production capacity in subsidiaries [2] Short-term Performance and Forecast - In Q1 2025, the company experienced a short-term decline in performance, with revenue of 241 million yuan, down 2.48% year-on-year, and a net profit of 63 million yuan, down 45.23% year-on-year [3] - The decline was attributed to increased costs from trial production of research and development products, low capacity utilization in subsidiaries, and higher R&D expenses [3] - The R&D expense ratio for Q1 2025 was 12.76%, up 7.26 percentage points year-on-year, while the gross margin was 40.79%, down 17.97 percentage points [3] Profit Forecast and Valuation - Due to delays in military product demand and uncertainties in the mass production timeline of research and development products, the company has adjusted its revenue and gross margin forecasts for special functional materials [4] - The projected net profits for 2025-2027 are 462 million yuan, 583 million yuan, and 717 million yuan, respectively, with significant downward adjustments from previous estimates [4] - The target price for the company is set at 85.32 yuan, based on a 36 times PE ratio for 2025, reflecting a reduction from the previous target of 111.80 yuan [4]

Investment Rating - The investment rating for the company is "Buy" with a target price of 85.32 RMB [7][8]. Core Views - The company reported a revenue of 1.139 billion RMB in 2024, representing a year-over-year increase of 24.17%, and a net profit of 414 million RMB, up 23.56% year-over-year. The Q4 revenue was 401 million RMB, showing a year-over-year growth of 27.27% and a quarter-over-quarter increase of 58.92% [1]. - The company is recognized as a leader in military stealth materials, with expectations for sustained demand and growth potential as subsidiaries ramp up production [1][4]. - The company experienced a decline in Q1 2025 revenue to 241 million RMB, down 2.48% year-over-year, and a net profit of 63 million RMB, down 45.23% year-over-year, primarily due to increased costs from R&D and underutilization of subsidiary production capacity [3][4]. Summary by Sections Financial Performance - In 2024, the company achieved revenue of 1.139 billion RMB, with a breakdown of revenue sources: special functional materials at 1.023 billion RMB (+15.27% YoY), acoustic metamaterials and instruments at 44 million RMB (+143.33% YoY), aerospace components processing at 62 million RMB (+461.84% YoY), and ceramic matrix composites generating 200.88 thousand RMB [2]. - The overall gross margin for 2024 was 50.69%, down 7.09 percentage points year-over-year, attributed to high fixed costs and underutilization of production capacity [2]. Earnings Forecast and Valuation - The forecast for net profit for 2025-2027 is adjusted to 462 million RMB, 583 million RMB, and 717 million RMB respectively, reflecting a downward revision of 28.68% and 28.83% for 2025 and 2026 [4][17]. - The company is assigned a PE ratio of 36 times for 2025, with a target price of 85.32 RMB, down from a previous estimate of 111.80 RMB [4][17]. Key Financial Metrics - Projected revenue growth rates for 2025-2027 are 20.41%, 27.38%, and 22.87% respectively, with net profit growth rates of 11.52%, 26.21%, and 23.05% [6][24]. - The company’s EPS is expected to increase from 2.13 RMB in 2024 to 3.68 RMB in 2027, indicating a positive growth trajectory [6][24].