Core Viewpoint - The recent surge in the stock price of Zhongzi Technology (688737.SH) appears disconnected from its financial performance, as the company reported a significant decline in net profit for Q1 2025 and a loss in 2024, despite optimistic forecasts from brokerage reports for future profitability [1][3][4]. Financial Performance - In Q1 2025, Zhongzi Technology reported a net profit of 7.70 million yuan, a year-on-year decline of 46.91% [1][3]. - The company experienced a loss of 26.21 million yuan in 2024, while its revenue for the previous year was 1.565 billion yuan, reflecting a growth of 1.35% [3][4]. Stock Price Movement - From April 9 to May 9, Zhongzi Technology's stock price increased by 60.17%, rising from a low of 13.89 yuan per share [3]. - The company's market capitalization reached 2.852 billion yuan, positioning it among the notable stocks in Sichuan [1]. Brokerage Expectations - Brokerage reports, such as those from Everbright Securities, project a significant increase in net profit, forecasting 57 million yuan for 2025, 238 million yuan for 2026, and 302 million yuan for 2027, surpassing the historical peak of 218 million yuan in 2020 [3][4]. Business Segments - The traditional internal combustion engine exhaust purification catalysts account for 92.88% of the company's revenue, raising questions about the growth potential in hydrogen energy, power batteries, and composite structural components [4][6]. - The company is involved in various sectors, including environmental catalysts, new energy storage, and advanced aerospace materials, emphasizing the foundational role of materials in industrial production [6][11]. Research and Development - Zhongzi Technology maintains a strong focus on R&D, investing around 10% of its revenue annually, supported by a close partnership with Sichuan University [11]. - The company is developing high-performance composite materials, including carbon fiber PEEK prepreg, which is crucial for applications in humanoid robots and aerospace [8][9]. Market Position and Competition - Zhongzi Technology aims to break into markets dominated by foreign companies, focusing on domestic substitution of key materials in environmental catalysts and hydrogen fuel cells [6][7]. - The company has made significant strides in market share for natural gas vehicle catalysts, increasing from 11.10% in 2019 to 20.69% in 2020, and in heavy-duty natural gas vehicles from 30.55% to 48.55% during the same period [7].

Investment Rating - The report maintains a "Buy" rating for the company [5] Core Insights - The company achieved a revenue of 1.565 billion yuan in 2024, a year-on-year increase of 1.35%, but reported a net loss of 26 million yuan. In Q1 2025, revenue reached 403 million yuan, up 7.52% year-on-year, with a net profit of 8 million yuan, down 46.91% [1][2] - The catalyst business has shown significant market expansion, with the internal combustion engine exhaust purification catalyst revenue at 1.453 billion yuan in 2024, a decline of 3.90%. However, the industrial catalyst revenue surged by 65.73% to 13.8786 million yuan. The hydrogen energy product revenue was 732.06 thousand yuan, indicating continuous breakthroughs in business development [2] - The high-end composite material business is expected to become a new growth point, with the company actively developing carbon fiber PEEK prepreg technology. The composite structure project is under construction, with a planned annual production capacity of 1 million square meters of prepreg and 80 tons of aerospace composite materials [3] Summary by Sections Financial Performance - In 2024, the company reported a revenue of 1,565 million yuan, with a growth rate of 1.35%. The net profit attributable to the parent company was -26 million yuan. For 2025, the estimated revenues are projected to be 2,270 million yuan, with a net profit of 57 million yuan [4][10] Revenue Growth - The company is expected to see significant revenue growth in the coming years, with projections of 2,906 million yuan in 2026 and 3,544 million yuan in 2027, reflecting growth rates of 27.98% and 21.96% respectively [4][10] Profitability Metrics - The report forecasts a return to profitability with net profits of 238 million yuan in 2026 and 302 million yuan in 2027, indicating a strong recovery from the current losses [4][10] Research and Development - The company has increased its R&D investment to 110 million yuan in 2024, a year-on-year increase of 26.44%, highlighting its commitment to innovation and development in new technologies [1][4] Market Positioning - The company has successfully entered new markets, including hydrogen energy and energy storage, with the latter showing a remarkable revenue increase of 309.47% in 2024 [2][3]