Investment Rating - The investment rating for the company is "Buy-A" with a target price of 36.6 CNY, maintaining the rating [5]. Core Views - The company reported a revenue of 4.417 billion CNY for the first three quarters of 2025, representing a year-on-year growth of 22.32%. The net profit attributable to shareholders was 415 million CNY, up 50.10% year-on-year [1]. - The global robotics industry is experiencing sustained high demand, driven by the integration of AI and intelligent manufacturing, with a projected growth in global robot installations by 6% to 575,000 units in 2025 [2]. - The company's MIM and SMC businesses are benefiting from the high demand in the AI server industry, with significant revenue growth and improved gross margins expected [3]. - The company is positioned as a core beneficiary in the magnetic materials and structural components sector during the AI computing cycle, with projected revenues of 6.235 billion CNY, 7.239 billion CNY, and 8.295 billion CNY from 2025 to 2027 [8]. Financial Performance - For the first three quarters of 2025, the company achieved a gross margin of 25.06% and a research expense ratio of 5.62%, reflecting operational efficiency improvements [2]. - The company’s revenue is expected to grow at a compound annual growth rate (CAGR) of 62.1% from 2023 to 2025, with net profit projected to reach 608 million CNY in 2025 [10]. - The company’s earnings per share (EPS) is forecasted to be 0.96 CNY in 2025, with a price-to-earnings (PE) ratio of 31.4 [10]. Market Outlook - The AI server market is projected to grow from 158.7 billion USD in 2025 to 222.7 billion USD by 2028, with generative AI servers increasing their market share from 29.6% to 37.7% [3]. - The company is developing integrated solutions for AI servers, combining structural, magnetic, and thermal components, which is expected to drive mid-term growth [3].

Core Insights - The news highlights China's focus on economic and social development over the next five years, emphasizing four key dimensions: "solid foundation upgrade, innovation nurturing, expansion and quality improvement, and strengthening efficiency" [1] - The concept of "innovation nurturing" aims to cultivate and expand emerging and future industries, aligning with the projection that the contribution of the "three new" economies to GDP will exceed 18% in 2024 [1] - The report indicates that the next decade will see the addition of a scale equivalent to recreating China's high-tech industry, underscoring a clear vision for high-quality economic development [1] Industry Opportunities - Relevant policy documents position the new materials industry as a core component of emerging pillar industries, with a focus on accelerating the development of strategic emerging industry clusters such as new energy and new materials [3] - The high dependence on imports for certain high-end materials in China is being addressed through policies aimed at overcoming the challenges of "high-end reliance on imports and low-end overcapacity" [3] - The global demand for electricity is increasing, particularly in the context of AI and other rapidly developing industries, leading to a predicted global nuclear fusion market size exceeding $40 trillion by 2050 [3][5] Company Developments - Tiangong International is transitioning from a traditional materials manufacturer to a high-end manufacturing core materials supplier, leveraging its core competencies in technology, scene expansion, and strategic layout [1] - The company has established a leading position in powder metallurgy technology, which addresses traditional steelmaking bottlenecks and significantly enhances material performance [8] - In the first half of 2025, Tiangong International's powder metallurgy material sales reached 589 tons, a 66.4% increase, with a unit price of 149,000 yuan per ton, significantly higher than existing high-speed steel and mold steel products [9] Strategic Initiatives - The company has signed a five-year supply agreement with Heng'erda to provide at least 100 tons of specialized powder high-speed steel annually starting in 2026, ensuring stable future performance [9] - Tiangong International has made breakthroughs in the application of powder metallurgy technology in advanced fields, including the successful delivery of high-nitrogen steel for planetary roller screw production [9] - The company has also achieved significant milestones in the aerospace sector, securing its first order for aerospace-grade titanium alloy fasteners, thus breaking foreign monopolies in this field [13] Financial Performance - Despite challenges such as U.S. tariffs and fluctuations in consumer electronics demand, Tiangong International achieved a net profit of 203 million yuan in the first half of 2025, reflecting a 10.4% year-on-year increase [16] - The company’s strong cost control and product pricing power are evident in its ability to maintain growth amid external pressures [16] Market Outlook - Analysts have a positive outlook on Tiangong International's future, with First Shanghai Securities predicting a compound annual growth rate of over 30% for net profit from 2025 to 2027, and a target price of 4.38 HKD, indicating a potential upside of 48.47% from the closing price on October 24 [17] - The company is well-positioned to capitalize on policy benefits and industry upgrades, with its technological innovations and strategic layouts paving the way for growth in high-end materials [19]

Core Viewpoint - The article emphasizes the strategic opportunities in the high-end materials industry driven by policy support and market demand, highlighting the transformation of Tian Gong International from a traditional materials manufacturer to a core supplier of high-end manufacturing materials [2][3]. Policy Foundation for Industry Ecosystem - The new materials industry is positioned as a core component of emerging pillar industries, with a focus on accelerating the development of strategic emerging industry clusters such as new energy and new materials [3]. - The policy aims to address the high dependence on imports for high-end materials and the overcapacity in low-end production, indicating an irreversible trend towards domestic substitution [3][4]. Strategic Opportunities in High-End Materials - The high-end materials sector is experiencing a strategic opportunity window, with industry resources likely to concentrate on leading companies with technological advantages [6]. - The global market for humanoid robots is projected to reach $154 billion by 2035, while the low-altitude economy in China is expected to grow to ¥1.5 trillion by 2025, creating strong demand for high-end materials [7]. Technological Breakthroughs and Growth Drivers - Tian Gong International's powder metallurgy technology is a key competitive advantage, addressing traditional steelmaking bottlenecks and achieving a production capacity of 8,000 to 10,000 tons of high-alloy powder annually [9]. - The company has reported a 66.4% increase in powder metallurgy material sales in the first half of 2025, with a unit price of ¥149,000 per ton, significantly higher than existing products [9][10]. Market Expansion and Strategic Partnerships - Tian Gong International has secured a five-year supply agreement with Heng Er Da for specialized powder high-speed steel, ensuring stable future performance and reinforcing its leading position in this niche market [10]. - The company has made significant advancements in the application of powder metallurgy technology in cutting-edge fields, including humanoid robots and nuclear fusion [11][12]. Long-Term Growth Potential - The company is focusing on titanium alloys as a key growth engine, with successful entry into the aerospace sector and ongoing development of medical-grade titanium alloys [13][16]. - Tian Gong International's R&D activities are robust, with 144 projects and 583 new products developed in the first half of 2025, showcasing strong innovation capabilities [18]. Financial Resilience and Market Recognition - Despite challenges from U.S. tariffs and fluctuations in consumer electronics demand, the company achieved a net profit of ¥203 million in the first half of 2025, reflecting a 10.4% year-on-year growth [20]. - Analysts have a positive outlook on Tian Gong International, with projections of over 30% compound annual growth rate in net profit from 2025 to 2027 [21]. Conclusion - Tian Gong International is positioned to leverage policy benefits and industry upgrades, with technological innovations and strategic layouts paving the way for growth in high-end materials [22].

Group 1 - The core viewpoint of the report is that the domestic market for tool steel is stabilizing and recovering, with high-end materials expected to be a future profit explosion point. The target price for Tiangong International is set at HKD 4.38, representing a 44.56% upside potential based on a 2026 PE of 18 times [1] - The sales volume of tool steel decreased by 5.2% year-on-year, but overall revenue increased by 2.3% to CNY 1.16 billion, with a gross margin rise of 0.5 percentage points to 13.8%. The recovery in the domestic tool steel industry, combined with rising raw material prices, offset the short-term pressure from overseas markets [1] - Powder metallurgy materials are identified as a future profit explosion point, with sales of 589 tons in the first half of 2025, a 66.4% increase quarter-on-quarter, and a price of CNY 149,000 per ton, significantly higher than ordinary high-speed steel and tool steel products [1] Group 2 - The company holds an optimistic outlook on the high-end titanium alloy business, anticipating that demand from downstream customers for new models will gradually be released next year. The company has achieved phased results in high-end titanium alloy industry construction in aerospace, healthcare, and nuclear fusion sectors [2]