Core Viewpoint - Tian Gong International (00826) has emerged as a representative enterprise in the special steel industry, successfully navigating the "anti-involution" strategy amidst China's economic challenges, focusing on high-quality development through specialization and innovation [1][2]. Industry Overview - The "anti-involution" strategy aims to transition China's economy from a "price red sea" to a "value blue sea," optimizing resource allocation and enhancing industrial capacity utilization [1]. - The steel industry initiated its first "anti-involution" action in May 2023, leading to a recovery in the steel industry's PPI index, which rose to 99.5% by September, an increase of 3.9 percentage points year-on-year [1]. Company Development - Tian Gong International has established itself as a model for the "specialized, refined, distinctive, and innovative" development path, highlighted during the first China Special Steel and New Materials Summit [2]. - The company has accelerated the commercialization of its powder metallurgy technology, achieving significant market recognition for its high-end new materials [2][4]. Technological Advancements - Tian Gong International has built a comprehensive powder metallurgy technology platform, advancing from product upgrades to additive manufacturing materials and critical material development [4]. - The company is the only domestic enterprise capable of large-scale production of powder metallurgy tool steel, with sales projected to grow from 83 tons in 2020 to 1,500 tons by 2025, reflecting a compound annual growth rate of 79.2% [5]. Market Position and Collaborations - The company has secured a significant partnership with Heng Er Da, committing to supply at least 600 tons of specialized materials over five years, marking a breakthrough in its domestic client base [5]. - Tian Gong International is strategically entering the titanium alloy 3D printing powder market, aiming to capture opportunities in the rapidly growing global 3D printing market, projected to grow from $27.5 billion in 2024 to $150.2 billion by 2032 [6]. Future Growth Potential - The company is focusing on developing critical materials for high-end equipment manufacturing and advanced technologies, including high-nitrogen alloy materials for humanoid robots and nuclear fusion applications [7]. - Tian Gong International's trajectory indicates a shift from being merely a special steel enterprise to becoming a high-end materials company, which is expected to enhance its market valuation significantly [8]. - Recent reports suggest that high-end materials will be a key profit driver for the company, with a target price of HKD 4.38, indicating a potential upside of 55% from recent closing prices [8].

Core Viewpoint - Tian Gong International (00826) reported a strong performance in the first half of 2025, with revenue of 2.342 billion RMB and a net profit of 204 million RMB, reflecting a year-on-year growth of 10.87% despite challenging market conditions [1][2]. Group 1: Financial Performance - In the first half of 2025, Tian Gong International's revenue reached 2.342 billion RMB, with a net profit of 204 million RMB, marking a 10.87% increase year-on-year [1]. - Domestic revenue accounted for 56.87% of total revenue, amounting to 1.332 billion RMB, showing a slight increase [2]. - Revenue from the Asian market (excluding China) grew by 26.22% to 361 million RMB, indicating potential for new growth in this region [2]. Group 2: Market Environment - The global economic landscape remains complex due to geopolitical instability and trade tensions, impacting export revenues across various product lines [2]. - Domestic economic growth is stable, with a GDP growth rate of 5.3% in the first half of 2025, contributing to a recovery in domestic demand for special steel [2]. Group 3: Product Performance - The internal sales revenue of tool steel increased by 4.7% to 566 million RMB, driven by demand recovery in the automotive, home appliance, and electronics sectors [3]. - The cutting tools segment experienced a slight decline due to a systematic optimization of the sales network, which is expected to improve in the second half of the year [3]. - Titanium alloy business faced a decline due to reduced sales in consumer electronics, but new orders in other applications are anticipated to enhance capacity utilization [4]. Group 4: Future Outlook - The market environment is expected to improve in the second half of 2025, driven by successful trade negotiations and anticipated interest rate cuts in the U.S., which may boost overseas demand [5]. - Tian Gong International's multi-dimensional layout in powder metallurgy technology is expected to enhance its commercial value and support its transition to a high-end materials manufacturer [7][12]. Group 5: Technological Advancements - Tian Gong International has made significant advancements in powder metallurgy, with 144 R&D projects and 583 new product developments from 2021 to the first half of 2025 [7]. - The company has established a comprehensive powder metallurgy technology platform, enhancing the value of its tool steel products and achieving a compound annual growth rate of 79.2% in sales volume from 83 tons in 2020 to an estimated 1500 tons in 2025 [8][9]. - The company is also expanding into the 3D printing titanium alloy powder market, with plans to acquire production capabilities to meet growing demand [10][11].