Investment Rating - The report maintains an "Accumulate" rating for the company [7]. Core Views - The company reported impressive Q3 results with revenue of 1.305 billion RMB, a year-on-year increase of 57.27% and a quarter-on-quarter increase of 19.00%. The net profit attributable to shareholders reached 106 million RMB, up 566.25% year-on-year and 25.15% quarter-on-quarter [1][7]. - The company is expected to benefit from a rich order backlog in shipbuilding and is entering a harvest period in its defense and energy businesses [1][4]. Summary by Sections Financial Performance - For Q3, the company achieved a gross margin of 21.78%, an increase of 7.36 percentage points year-on-year and 1.98 percentage points quarter-on-quarter. The net profit margin for Q3 was 8.15%, up 6.50 percentage points year-on-year [2]. - The total revenue for the first three quarters was 3.148 billion RMB, a year-on-year increase of 34.50%, with a net profit of 232 million RMB, up 202.12% year-on-year [1][2]. Business Operations - The company has a robust order book, having secured 18 new shipbuilding orders in August 2025, including various types of workboats and cargo ships. This is expected to enhance sales and gross margins [3]. - The shipbuilding business is progressing steadily, with recent deliveries including a 40,400-ton bulk carrier and a multi-purpose cargo ship [3]. Market Expansion - The company is actively exploring new markets in unmanned vessels and LNG refueling, which are anticipated to enter a growth phase. In the defense sector, it is developing various unmanned vessels to meet national maritime defense needs [4]. - In the energy sector, the company is involved in LNG refueling stations and has completed several projects related to liquid nitrogen and LNG refueling [4]. Profit Forecast and Valuation - The company has improved its manufacturing experience and delivery capabilities, leading to enhanced profitability in the shipbuilding EPC segment. The gross margin for this segment is projected to be 19% in 2025 and 17% in 2026 [5]. - The forecast for net profit attributable to shareholders has been raised to 305 million RMB for 2025, 333 million RMB for 2026, and 341 million RMB for 2027 [5]. The target price is set at 7.39 RMB based on a PE ratio of 42 for 2025 [5].

Core Viewpoint - The company held a performance briefing for the first half of 2025, discussing capacity, orders, business progress, and market value management with investors [1] Group 1: Capacity and Orders - The company has enhanced its production capacity through asset-light expansion methods such as site leasing and cooperative production, with future expansion considered based on market orders and policies [2] - Order prices are influenced by various factors including market conditions, dock availability, customer order quantities, order complexity, delivery timelines, and raw material costs [2] - The company conducts foreign exchange hedging based on cautious forecasts of foreign currency receipts and payments, ensuring effective management of foreign exchange risks [2] Group 2: Special Vessels and Unmanned Boats - The company is focused on delivering special vessel and military auxiliary vessel orders, with progress reported in the semi-annual report [3] - The defense equipment business aligns with national maritime defense needs, emphasizing technology upgrades and market expansion for unmanned vessels [3] - Various unmanned vessel projects have been developed, including unmanned feeding fishing boats, with planned deliveries in the second half of the year [3] Group 3: Energy Business and Company Classification - The energy segment, particularly through its subsidiary Woking Natural Gas, has seen increased revenue from new energy vessel refueling and related technical consulting projects [4] - According to the China Securities Regulatory Commission classification, the company falls under "Manufacturing" in the "Railway, Shipbuilding, Aerospace, and Other Transportation Equipment Manufacturing" category [4] Group 4: Market Value Management and Legal Matters - In response to stock value decline, the company established a market value management system in January 2025, focusing on core business growth and improving governance [5] - The company is actively responding to a lawsuit involving a shareholder, with measures taken to freeze shares and enforce performance compensation claims [5] - As of the first half of 2025, over 70% of the company's effective orders are from overseas projects, with operations continuing normally despite external market influences [5]

Group 1: Company Performance and Capacity - The company has enhanced its production capacity through asset-light expansion models, including site leasing and cooperative capacity [2][3] - In the first half of 2025, the company reported that over 70% of its effective orders were from overseas projects [9] - The company is actively developing various special and civilian unmanned vessel projects, with deliveries planned according to contract schedules [3][4] Group 2: Financial Management and Market Response - The company has established a "Value Management System" to focus on core business growth and improve governance and investor communication [6][9] - The energy sector's revenue share has increased due to the company's natural gas operating qualifications, with projects like LNG pre-cooling and technical consulting services contributing to this growth [5] - The company is taking legal actions to enforce performance compensation from its major shareholder, with ongoing litigation regarding historical performance commitments [10][12] Group 3: Legal Issues and Stock Performance - The company is facing ongoing litigation with a former shareholder, with a court ruling expected but not yet issued [10][12] - The stock price has been declining, influenced by macroeconomic factors and market sentiment, despite the company's stable operational performance [11][12] - The company is considering measures to stabilize its stock value, including potential stock buybacks and employee stock ownership plans [9][11]

Core Insights - Tianhai Defense's unmanned vessel business aligns closely with national marine market demands, focusing on technological upgrades and innovation in special unmanned vessels and underwater security equipment [1] - The company has actively expanded its market by developing various special and civilian unmanned vessel projects, including an unmanned feeding fishing boat to support marine ranching development, with planned deliveries in the second half of the year and beyond [1] - Founded in 2001 and listed in 2009, Tianhai Defense is a unique provider of integrated solutions in ship design and construction, specializing in the research and manufacturing of special vessels and defense equipment, as well as comprehensive services in new energy [1]