Company and Industry Summary Company: Tian Gong International Key Industry: Titanium Alloy and Powder Steel Core Insights and Arguments - **Titanium Alloy Demand Surge**: The company has signed a contract with Apple for approximately 4,000 tons of titanium alloy, representing a fourfold increase compared to 2025. Total titanium alloy sales are expected to reach 5,000-6,000 tons in 2026, driven by demand from smartphone manufacturers like Apple, Samsung, Xiaomi, and Huawei [2][3]. - **Profit Forecast for Titanium Alloy Business**: Revenue from the titanium alloy business is projected to reach 1 billion yuan in 2026, benefiting from a decrease in sponge titanium prices to 40,000 yuan per ton. The company has not adjusted its supply prices, leading to an expected net profit margin of 45%, corresponding to a net profit of approximately 450 million yuan [2][3]. - **Strong Growth in Powder Steel Business**: The sales target for powder steel in 2025 is set at 1,500 tons, with a goal of 3,000 tons in 2026. The growth is primarily driven by nuclear fusion-related projects, including a tender for 1,100 tons of boron steel and deactivation steel. The nuclear fusion market presents significant growth potential [2][5]. - **Overall Profitability**: The company's core business, excluding titanium alloy, is expected to generate a profit of 350-400 million yuan in 2025, reflecting a year-on-year growth of 10%-15%. Including the titanium alloy business, total profitability is anticipated to exceed 700 million yuan. The acquisition of a 3D printing titanium powder company will further enhance revenue and profit [2][6]. - **Commercial Application of Nuclear Fusion Materials**: Materials used in nuclear fusion reactors will become consumables that need regular replacement, creating sustained demand and market value growth for material companies. The company is collaborating with research institutions and expects to secure orders by April 2026 [2][7]. - **Development in Integrated Die-Casting for New Energy Vehicles**: The company is actively developing integrated die-casting in the new energy vehicle sector, collaborating with Tesla's mold manufacturer and other domestic automakers. The performance of powder steel molds has improved significantly, with cost reductions expected to yield substantial market progress in 2026 [2][4][8]. Additional Important Insights - **Future Growth Expectations for Powder Steel**: The company is optimistic about its powder steel business, forecasting production of 1,800 tons in 2026 at a price of approximately 100,000 yuan per ton, with a net profit margin of around 35%. This could contribute an additional 70-80 million yuan in profit [4][9]. - **Valuation Compared to US Peers**: Compared to US peers like Carpenter Technology, which has a PE ratio of 40 despite sluggish growth, the company is currently undervalued. It is the leading global producer of tool steel and the only domestic producer with a production and sales volume exceeding 1,000 tons [2][11]. - **Overall Investment Value Assessment**: The company is seen as a significant investment opportunity due to its short-term contributions from the titanium alloy business and long-term growth potential from powder steel. The current low valuation, combined with market catalysts, makes it a noteworthy target for investment in the machinery sector [2][12].

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 ocean," 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 is recognized as a key case study in the "specialized, refined, distinctive, and innovative" development path, highlighted during the first China Special Steel and New Materials Summit [2]. - The company has established a comprehensive powder metallurgy technology platform, advancing from product upgrades to additive manufacturing materials and critical material development [4]. Product and Market Expansion - In the field of tool steel, Tian Gong International is the only domestic enterprise producing powder metallurgy tool steel at scale, 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]. - The company has secured a significant partnership with Heng Er Da, committing to purchase at least 100 tons of cutting tool materials annually for five years, indicating a breakthrough in the domestic market [5]. Technological Advancements - Tian Gong International's powder metallurgy technology allows for a material yield rate of over 80%, significantly enhancing product performance compared to traditional steel production methods [5]. - The company is strategically entering the titanium alloy 3D printing powder market, aiming to capture growth opportunities in the rapidly expanding global 3D printing market, projected to grow from $27.5 billion in 2024 to $150.2 billion by 2032 [6]. Strategic Collaborations - A strategic partnership with Ningbo Saiweida aims to innovate in high-end die materials and additive manufacturing technologies, further enhancing Tian Gong International's position in the advanced manufacturing sector [6]. - The company is also focusing on developing critical materials for high-end equipment manufacturing and frontier technologies, including high-nitrogen alloy materials for humanoid robots and nuclear fusion applications [7]. Future Outlook - Tian Gong International is transitioning from a traditional special steel enterprise to a high-end materials company, which is expected to enhance its market valuation as the steel industry accelerates its "anti-involution" efforts [8]. - Recent reports indicate that high-end materials will become a significant profit driver for the company, with a target price of HKD 4.38, representing a potential 55% upside from recent closing prices [8].

Group 1 - The core viewpoint of the articles highlights the recovery of China's steel industry, with the PPI index for the steel sector reaching 99.5% in September, an increase of 3.9 percentage points compared to the previous month [1] - The PPI index has shown a significant upward trend since May, coinciding with the industry's first initiative to address "involution" competition [1] - Several steel companies are adopting transformation and upgrading strategies, focusing on differentiated development to maintain the overall interests of the industry chain [3] Group 2 - Wang Wenjin, Executive Chairman of the China Special Steel Enterprises Association, emphasizes the need for a new growth path to resolve the issue of involution, advocating for a specialized and innovative development approach [5] - The first China Special Steel and New Materials Specialized and Innovative Summit recently released a report promoting differentiated development routes for related enterprises, aiming for intelligent and high-end transformation [5] - The production of "hand-tear steel," which is the world's thinnest steel at 0.015 mm thick, has recently achieved full-scale production, with a daily output of approximately 3 tons [7] Group 3 - The "hand-tear steel" is being integrated into various applications, including soft-pack materials for new energy vehicle batteries and components in consumer electronics, enhancing battery capacity and extending device lifespan [9] - The introduction of "hand-tear steel" has significantly improved the durability of foldable screens, increasing their lifespan from 40,000-50,000 folds to potentially 80,000-100,000 folds [11] - The production process of "hand-tear steel" is complex, requiring precise control and collaboration among multiple operators to achieve the desired thickness and quality [13] Group 4 - The articles also discuss the emergence of the world's smallest steel, with particles measuring only 500 microns in diameter, which can be used in advanced applications such as new energy vehicle casting equipment [16] - Powder metallurgy products have a significantly longer lifespan compared to traditional methods, with potential usage life extending from 6,000 to 20,000 molds, and possibly up to 50,000 or 80,000 molds in the future [18] - The annual production capacity of powder metallurgy at Tiangong International has reached 8,000 tons, with applications spanning from complex tools to high-end components for humanoid robots and fusion reactors [20]

Group 1: Industry Overview - In September 2023, China's steel industry PPI (Producer Price Index) continued to rise, reaching 99.5%, an increase of 3.9 percentage points compared to the previous month [1] - The PPI data has shown a significant upward trend since May 2023, coinciding with the industry's first initiative to address "involution" competition [1] Group 2: Company Strategies - Several steel companies are adopting transformation and differentiation strategies to maintain the overall interests of the industry chain [3] - The China Special Steel Enterprises Association emphasizes the need for a new development path to solve the issue of involution, advocating for a focus on specialized and innovative growth [5] Group 3: Product Innovations - At the first China Special Steel and New Materials Summit, a report was released to promote differentiated development routes for enterprises, focusing on intelligent and high-end transformation [6] - The world's thinnest steel, measuring only 0.015 mm thick, has recently achieved mass production, with a daily output of approximately 3 tons [8] - The production process of this "hand-torn steel" is complex, requiring precise control to achieve the desired thickness without damaging the surface [11][13] Group 4: Application and Performance - "Hand-torn steel" is being integrated into various applications, including soft-pack materials for new energy vehicle batteries and components in consumer electronics, enhancing battery capacity and extending device lifespan [11] - The introduction of "hand-torn steel" has significantly improved the durability of foldable screens, increasing their lifespan from 40,000-50,000 folds to potentially 80,000-100,000 folds [11] - Powder steel, with particles as small as 500 microns, is being utilized in advanced applications, including high-tech products and precision tools, with a lifespan improvement from 6,000 to potentially 50,000 mold cycles [15][17]

Group 1 - Heng Er Da (300946.SZ) signed a strategic cooperation framework agreement with Tian Gong International (00826) to collaborate on the application of powder high-speed steel and high-nitrogen steel in planetary roller screw manufacturing [1][2] - Tian Gong International is the only global manufacturer of a full range of powder products, with its powder steel certified by the North American Die Casting Association (NADCA), breaking a 30-year monopoly held by European and American companies [1] - Heng Er Da will purchase no less than 100 tons of cutting tool materials annually from Tian Gong International for five years starting in 2026, totaling at least 600 tons [1] Group 2 - Tian Gong International's self-developed high-nitrogen alloy TPMDC02A was delivered to Jiangsu Runfu Power in early July for mass production of planetary roller screws, making it the first domestic company to apply high-nitrogen steel in this area [2] - The collaboration aims to enhance the precision and yield of Heng Er Da's rolling components, addressing the issues of low processing efficiency and high costs in domestic screw manufacturing [2] - This partnership marks a commercial milestone for Tian Gong International's powder steel and high-nitrogen steel technologies, highlighting its strategic positioning in the humanoid robot and high-end equipment sectors [2]