Investment Rating - The investment rating for the company is "Outperform" (maintained) [3] Core Views - The company achieved a revenue of 237 million yuan in H1 2025, representing a year-on-year growth of 7.29%, and a net profit attributable to the parent company of 53 million yuan, up 13.87% year-on-year [3] - The company is actively expanding its product offerings in high-pressure equipment, data center liquid cooling hoses, and nuclear power hoses, which are expected to drive future growth [3][4] - The company has been included in the first-level supplier system of China National Petroleum Corporation, which is expected to enhance its market presence [3] Financial Summary - Revenue projections for 2025-2027 are adjusted to 113 million yuan (previously 122 million yuan), 138 million yuan (previously 147 million yuan), and 164 million yuan (previously 175 million yuan) respectively, with corresponding EPS of 0.89, 1.09, and 1.29 yuan per share [3][6] - The company’s total market capitalization is 3.202 billion yuan, with a circulating market capitalization of 2.089 billion yuan [3] - The company’s gross profit margin is projected to be 41.6% in 2025, with a net profit margin of 22.3% [6][8]

Group 1: Investor Relations Activities - The company participated in a specific investor research activity and an online collective reception day for investors in Henan province on May 21-22, 2025 [3][4] - Attendees included representatives from Ping An Asset Management and Southwest Securities, along with the company's board secretary and financial officers [4] Group 2: Product Development and Market Demand - The first 300L ultra-high pressure food sterilization equipment has been installed and is currently undergoing trial production, with customer satisfaction reported [4] - There is a growing market demand for ultra-high pressure sterilization equipment, particularly in high-end food processing, driven by consumer preferences for healthy, additive-free products [5] - The pricing of ultra-high pressure sterilization equipment is influenced by R&D, material, and sales costs, with plans to optimize these factors for better cost efficiency [6] Group 3: Revenue and Product Strategy - The revenue contribution from resin hoses is currently small, but there are plans to enhance market development for this high-value product [7] - The company has completed trials for 43 types of nuclear power hoses and aims to accelerate domestic production to replace imports [8] Group 4: Oil and Gas Sector Initiatives - The company has developed a 92-meter acid fracturing hose assembly for land oil and gas fracturing equipment, with plans to expand into offshore oil drilling [9] - The company is focusing on the development of API 17K series products and aims to launch production lines by 2025 [9] Group 5: Research and Development Achievements - Significant progress has been made in 2024 on nuclear power hoses and high molecular cyclic materials, enhancing the company's product structure and market competitiveness [10] Group 6: Project Wins and Market Expansion - The company won a project worth over 5 million for acid fracturing hose assembly, with an expected delivery period of one month [11] - There is a commitment to expanding the domestic oil hose market and participating in more tenders [11] Group 7: High-Margin Product Development - The LT304 multi-functional crude oil transfer hose has strong market demand due to its corrosion resistance and flexibility, positioning it as a viable alternative to traditional steel pipes [12] - The company plans to enhance its international market presence for oil hose products while being mindful of market development risks [12] Group 8: Shareholder Returns - The company emphasizes strong operational performance and stable cash dividends as a means to reward shareholders, with future dividend policies to be determined based on business conditions [13]

Investment Rating - The report maintains a "Recommended" investment rating for the company [2][5]. Core Viewpoints - The company has made significant progress in multiple new product layouts, including nuclear power hoses, data center liquid cooling hoses, and ultra-high pressure food sterilization equipment, which are expected to contribute to future growth [1][4]. - The company's revenue for 2024 is projected to be 484 million yuan, with a slight decline of 0.32% year-on-year, while the net profit is expected to be 107 million yuan, down 19.82% year-on-year. However, a strong recovery is anticipated in 2025, with net profits expected to grow by 16.30% to 125 million yuan [6][8]. - The company has achieved a gross margin of 43.26% in 2024, although it has decreased by 4.58 percentage points compared to the previous year. The increase in orders for high-value products, such as acid fracturing hose assemblies, has contributed to a recovery in performance in the first quarter of 2025 [4][8]. Financial Performance Summary - The company reported a revenue of 48,383.81 million yuan in 2024, with a net profit of 10,721.42 million yuan. In the first quarter of 2025, revenue increased by 23.14% year-on-year to 12,426.35 million yuan, and net profit surged by 86.13% to 3,564.10 million yuan [4][6]. - The projected financial indicators for 2025-2027 include a net profit of 1.25 billion yuan in 2025, 1.44 billion yuan in 2026, and 1.67 billion yuan in 2027, with corresponding growth rates of 16.30%, 15.70%, and 16.10% respectively [1][6]. - The company is expected to maintain a healthy financial position with a projected total asset of 1,025.62 million yuan in 2025 and a total liability of 227.41 million yuan [7][8].

Core Viewpoint - The report highlights the recovery of LITONG Technology's performance in Q1 2025, driven by increased orders for acid fracturing hose assemblies and a rebound in domestic demand for construction machinery [1][2]. Financial Performance - In 2024, the company reported operating revenue of 483.84 million yuan, a slight decrease of 0.32% year-on-year, and a net profit attributable to shareholders of 107.21 million yuan, down 19.82% year-on-year [1]. - For Q1 2025, the company achieved operating revenue of 124.26 million yuan, representing a year-on-year growth of 23.14%, and a net profit attributable to shareholders of 35.64 million yuan, up 86.13% year-on-year [1]. Product and Market Development - The company has seen an increase in orders for acid fracturing hose assemblies, contributing to a rise in gross margin to 43.26% in 2024, despite a decline of 4.58 percentage points from the previous year [2]. - The company has obtained API17K certification for its products, facilitating its expansion into the marine engineering hose market [3]. - Multiple new product developments have progressed, including 43 types of nuclear power hoses and a high-pressure food sterilization device, indicating a broadening of the company's product portfolio [4]. Future Growth Prospects - The company projects net profits of 125 million yuan, 144 million yuan, and 167 million yuan for 2025, 2026, and 2027, respectively, with year-on-year growth rates of 16.30%, 15.70%, and 16.10% [4]. - The market potential for the company's main products, including hydraulic rubber hoses and industrial hoses, is significant, with new product lines expected to contribute to future revenue growth [4].

Summary of the Conference Call for LITONG Technology Company Overview - LITONG Technology's main business segments include Fluid (hydraulic hoses and assemblies, oil drilling hoses, etc., accounting for over 95%), Materials (rubber compounds, etc.), and Equipment (ultra-high pressure cleaning and cutting equipment) [1][3] Core Business Insights - The Fluid segment is the primary revenue source but faces market competition and downstream industry volatility risks [1] - The company is actively expanding its polymer materials business, establishing a research and development base in Qingdao, focusing on general and specialty rubber compounds, with expected revenue of over 18 million yuan in 2024 [1][5] - The ultra-high pressure equipment and services segment is a key future development area, with successful delivery of an ultra-high pressure food sterilization device in 2024, although market promotion faces cost challenges [1][6][9] Financial Performance - In 2024, LITONG Technology achieved revenue of 483 million yuan, remaining stable year-on-year, while net profit decreased to 107 million yuan due to a decline in high-margin oil hose sales and significant expenses from new business expansions [2] Strategic Developments - The company plans to focus on high-value products such as oil hoses (API 17K series), ultra-high pressure resin hoses, and data center liquid cooling hoses in 2025 [1][14] - LITONG aims to localize marine crossover hoses by 2025, having passed API 17K certification, addressing the domestic market's reliance on imports [4][22] Research and Development - R&D is structured across three main segments: Fluid in Luohe, Polymer Materials in Qingdao, and Ultra-high Pressure Equipment in Zhengzhou, with significant improvements in high-end equipment manufacturing capabilities [1][10][11] - The establishment of a new R&D base in Qingdao enhances the company's competitive edge, particularly in polymer materials [11] Market Challenges and Responses - The U.S.-China tariff policies pose challenges, but the company is focusing on improving product quality and expanding into markets like the Middle East and Russia to mitigate impacts [4][16][18] - The company is exploring leasing options for high-value products to alleviate customer uncertainties and accelerate market penetration [21] Future Plans and Innovations - Plans for ultra-high pressure sterilization equipment include establishing small-scale processing service centers to meet customer needs, with potential nationwide expansion based on market response [9][28] - The company is also developing a new device for beverage sterilization that improves production efficiency by eliminating the need for pre-packaging [15] Industry Outlook - The engineering machinery industry is expected to show signs of recovery in 2025, with a projected two-month transmission period for improvements [38] - The nuclear power sector is gradually achieving domestic substitution, with LITONG collaborating with nuclear institutes to develop specialized hoses [26][27] Conclusion - LITONG Technology is strategically positioned to enhance its core business segments while navigating market challenges through innovation and expansion into high-value product areas. The focus on R&D and market diversification is expected to drive future growth and resilience against external pressures.