Core Viewpoint - The announcement details Wuhan Huazhong Numerical Control Co., Ltd.'s plan to issue A-shares to specific investors, highlighting the potential dilution of immediate returns and the measures to compensate for this dilution [1][4]. Financial Impact Analysis - The company plans to issue 41,726,349 shares, which will increase the total share capital from 198,696,906 to 240,423,255 shares post-issuance [2]. - The projected net profit for 2025 under three scenarios shows a decrease of 10%, remaining stable, and an increase of 10%, with corresponding impacts on earnings per share (EPS) [3][4]. - In the scenario where net profit decreases by 10%, the diluted EPS is projected to be -0.3065, while in the scenario of a 10% increase, it is projected to be -0.2073 [3]. Measures to Compensate for Dilution - The company intends to enhance its capital strength and risk resistance through effective use of raised funds, focusing on improving operational management and internal controls [5][6]. - Specific strategies include strengthening management innovation, improving governance structures, and ensuring effective use of raised funds to protect investor interests [6][7]. Commitments from Management - The board of directors and senior management have committed to fulfilling the measures to compensate for the dilution of immediate returns, with accountability for any losses incurred by investors due to non-compliance [8][9]. - The commitments include adherence to regulatory requirements and ensuring that the compensation measures are linked to the performance of the company [8][9]. Approval and Disclosure - The board has approved the analysis of the dilution impact and the compensation measures in previous meetings, with ongoing disclosures planned in regular reports [9].

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [2] Core Views - The company's performance is under short-term pressure due to increased expense ratios and higher impairment losses, leading to a net profit loss in 2024 [2] - The company continues to invest heavily in R&D, which supports the localization of CNC systems [6] - The revenue from the CNC systems and machine tools segment increased by 9.82% year-on-year, while the robotics and intelligent production line segment saw a significant decline of 36.39% [2] Financial Performance Summary - In 2024, the company achieved total revenue of 1.782 billion yuan, a year-on-year decrease of 15.71% [2] - The net profit attributable to the parent company was -55.37 million yuan, marking a significant decline compared to the previous year [2] - The gross profit margin for 2024 was 33.48%, an increase of 0.56 percentage points year-on-year [4] - The company reported a net cash flow from operating activities of 365 million yuan in 2024, an increase of 72.54% year-on-year [5] R&D and Innovation - The company increased its R&D expenditure to 323 million yuan in 2024, a year-on-year increase of 5.03% [6] - The company has developed the "Huazhong 10" intelligent CNC system, which integrates CNC machine tool mathematical models with AI data models to enhance processing precision and reduce processing cycles [6] Market Position and Valuation - The current market capitalization of the company is approximately 5.305 billion yuan, with a price-to-earnings ratio of 199.94 for 2023 and projected to decrease to 22.85 by 2027 [9][12] - The company is considered a rare asset in the high-end CNC system sector, justifying the "Accumulate" rating despite the short-term challenges [11]