Summary of Tunan Co., Ltd. Conference Call Company Overview - Tunan Co., Ltd. is a rare profitable company in the military industry with a gross margin exceeding 45%, providing a solid value foundation and significant advantages within the sector [2][4][10]. Key Developments - The company is focusing on the development of its new machining business at the Shenyang branch, utilizing a "small core, large collaboration" model to partner with industry chain collaborators, thereby unlocking growth potential and complementing its Jiangsu headquarters [2][5]. - As of the first half of 2025, Tunan's total orders reached 1.75 billion yuan, showing substantial year-on-year and quarter-on-quarter growth, with significant contributions from the new Shenyang business expected to enhance revenue [2][6]. Industry Dynamics - The aerospace engine supply chain is gradually recovering, with expectations that Tunan will benefit from the industry's improving conditions in 2026, alongside the new business growth in Shenyang and steady recovery in Jiangsu [2][7]. Financial Projections - The company anticipates a net profit of approximately 300 million yuan for 2025, increasing to 430 million yuan in 2026, which corresponds to a valuation of about 26 times for 2026, indicating significant growth potential and a relatively safe valuation margin [2][8]. Shenyang Branch Business Outlook - The new business at the Shenyang branch is projected to generate revenues of 550 million yuan in 2025, 530 million yuan in 2026, and nearly 700 million yuan in 2027, contributing significantly to the company's income in the coming years [2][9]. - Although the profitability of the machining business may be slightly lower than that of the Jiangsu headquarters, it is expected to provide considerable profits due to better turnover rates [3][9]. Overall Assessment - Tunan Co., Ltd. demonstrates clear incremental changes and possesses a relatively safe valuation margin. The optimistic outlook for the new business at the Shenyang branch, along with strong performance in terms of revenue and profitability, supports a positive view on the company's future development [2][10].

Summary of Tunan Co., Ltd. Conference Call Company Overview - Tunan Co., Ltd. started with welding materials and has transformed into a high-temperature alloy enterprise, benefiting from domestic strategic layouts since the 1990s. The core business includes casting high-temperature alloys, deformed high-temperature alloys, special stainless steel, and other alloy products, with casting and deformed high-temperature alloys accounting for approximately 80% of total revenue [2][4][5]. Core Business Insights - The company has established a deep collaboration model with main engine manufacturers through investments in its Shenyang subsidiary, aiming to expand into the aerospace engine components business and achieve upstream and downstream integration [2][6]. - From 2020 to 2023, the company experienced rapid growth, but revenue and profit are expected to decline in 2024 and the first half of 2025 due to inventory destocking cycles. A recovery in demand is anticipated in the second half of 2025, marking an operational turning point [2][8]. Financial Performance - The company’s overall profitability remains stable, although there was a slight decline in the first half of 2025 for casting high-temperature alloys and special stainless steel due to product price adjustments and structural changes. The industry faces pressure for cost reduction, but gross margins are expected to stabilize post-demand recovery [2][11]. Order Situation - As of mid-2025, the company holds a total order amount of 1.75 billion yuan, significantly up from 520 million yuan in the same period last year and 300 million yuan at the end of the previous year, enhancing confidence in future performance [10]. Business Segment Performance - The deformed high-temperature alloy business shows steady growth due to its broad application scenarios. In contrast, the casting high-temperature alloy business peaked in 2023 but saw a significant decline in 2024, with no immediate improvement expected in the first half of 2025. The aerospace engine components business is expected to start contributing revenue in the first half of 2025 [9][10]. Strategic Investments - In 2021 and 2022, the company invested in two subsidiaries in Shenyang, forming a close collaboration model with main engine manufacturers. This strategic choice has proven effective, providing strong growth potential [6]. Shareholding Structure and Incentives - The current chairman and his father are the actual controllers of the company, with a relatively stable shareholding structure. The implementation of equity incentive mechanisms in 2022 and 2023 has effectively improved performance and operational quality [7]. Industry Position and Competitive Advantages - Tunan Co., Ltd. holds a significant market share in the high-temperature alloy industry, focusing on casting and deformed high-temperature alloys, which account for about 90% of the market. The company has achieved breakthroughs in integrated casting technology, enhancing product quality and reducing costs [12][14][15]. Future Growth Prospects - The aerospace fastener business is expected to have high profitability, with demand not only for new aircraft manufacturing but also for maintenance and aftermarket services. This sector's growth potential is anticipated to provide continuous momentum for Tunan Co., Ltd. [19][20]. Long-term Strategy - The company plans to continue focusing on high-value-added products while actively expanding into horizontal market applications. By maintaining a priority on military products and enhancing competitiveness through technological innovation and capacity expansion, Tunan Co., Ltd. aims to solidify its market position for long-term stable development [21].