Core Viewpoint - Longi Technology is enhancing its overseas layout by investing approximately 210 million yuan in the second phase of its Vietnam project, aiming to upgrade production capacity and localize the supply of raw materials for permanent magnetic ferrite [1][2]. Group 1: Investment and Expansion - The investment of about 210 million yuan will be used to construct the second phase of the Vietnam project, which will add 10,000 tons of permanent magnetic ferrite wet-pressed magnetic tile capacity and 25,000 tons of pre-burned material capacity [2]. - The project is set to begin construction in September 2025 and will be completed in 36 months, contributing to the company's long-term stable development [2][3]. Group 2: Financial Performance - In the first half of 2025, Longi Technology achieved operating revenue of 591 million yuan, a year-on-year increase of 6.36%, and a net profit of 85.25 million yuan, up 31.82% from the previous year [5]. - The growth in profit is attributed to increased capacity at the Vietnam subsidiary, improved scale effects, and a reduction in losses from the soft magnetic business [5]. Group 3: Business Segments - Longi Technology operates in three main business segments: permanent magnetic, soft magnetic, and inductors, effectively diversifying market risks [4]. - The permanent magnetic ferrite segment has a capacity of 50,000 tons and is widely used in automotive, variable frequency appliances, and power tools [4]. Group 4: Research and Development - The company emphasizes technological innovation, with R&D expenses exceeding 5% of revenue, amounting to 31.35 million yuan in the first half of 2025 [5][6]. - Longi Technology holds over 200 national patents, covering key processes in the production of high-performance magnetic tiles [6]. Group 5: Market Position - As of September 15, the company's stock price was 62.02 yuan per share, with a year-to-date increase of approximately 102%, and a total market capitalization exceeding 7 billion yuan [7].

Core Viewpoint - Longi Technology (龙磁科技) is initiating a new round of expansion plans, investing approximately 210 million yuan in its subsidiary in Vietnam to enhance production capacity and localize supply chains for permanent magnet materials [1][2]. Group 1: Expansion Plans - The company plans to invest about 210 million yuan in the second phase of its project, which is set to start construction in September 2025 and will take 36 months to complete [1]. - The new project aims to add 10,000 tons of permanent magnet ferrite wet-pressed magnetic tile capacity and 25,000 tons of pre-burned material capacity [1]. - The expansion is expected to enhance the company's production scale and extend its supply chain upstream [1]. Group 2: Current Production Capacity - Currently, Longi Technology has a total permanent magnet capacity of 50,000 tons, distributed across Anhui and Vietnam, with the Vietnam subsidiary achieving a capacity of 12,000 tons after recent upgrades [2]. - The Vietnam base is experiencing high demand, with multiple clients requesting increased shares due to tight supply conditions influenced by rare earth and trade policies [2]. Group 3: Financial Performance - In the first half of the year, Longi Technology reported revenue of 591 million yuan, a year-on-year increase of 6.36%, and a net profit of 85.25 million yuan, reflecting a growth of 31.82% [3].

Performance Summary - In H1 2025, the company achieved revenue of 861 million yuan, a year-on-year increase of 8.1%, and a net profit attributable to shareholders of 191 million yuan, up 3.3% year-on-year [1] - Q2 2025 saw revenue of 477 million yuan, a year-on-year increase of 3.5% and a quarter-on-quarter increase of 24.5%, with net profit attributable to shareholders reaching 118 million yuan, up 3.4% year-on-year and 59.3% quarter-on-quarter [1] - The revenue from soft magnetic powder cores, chip inductors, and metal soft magnetic powder was 657 million, 176 million, and 26 million yuan respectively, with soft magnetic powder cores growing by 12.0% year-on-year, while chip inductors declined by 9.7% [1] Profitability Analysis - The gross margin for H1 2025 was 39.8%, a decrease of 0.7 percentage points year-on-year, while Q2 2025 gross margin was 41.4%, down 0.9 percentage points year-on-year but up 3.8 percentage points quarter-on-quarter [2] - The net profit margin for H1 2025 was 22.3%, a decrease of 0.9 percentage points year-on-year, with Q2 2025 net profit margin at 24.8%, showing an increase of 0.3 percentage points year-on-year and 5.7 percentage points quarter-on-quarter [2] Cash Flow and Growth Drivers - In H1 2025, the net operating cash flow was 260 million yuan, a significant increase of 119.6% year-on-year, indicating potential for continued cash flow improvement [3] - The company has established long-term stable partnerships with major brands such as BYD, Gree, Huawei, and MPS, and has completed the R&D of the fifth generation of iron-silicon magnetic powder cores, positioning itself to benefit from growth in the energy storage and new energy vehicle markets [3] - The company is expanding its customer base and has formed partnerships with several global manufacturers, while also exploring new application areas such as ASIC, optical modules, DDR, and consumer electronics, particularly in the context of AI server deployments by major tech companies [3] Investment Outlook - As a leading domestic manufacturer of alloy soft magnetic powder cores, the company is well-positioned in the high-growth energy storage and new energy sectors, with chip inductors opening a second growth avenue [4] - Projected net profits for 2025-2027 are 450 million, 620 million, and 810 million yuan respectively, with corresponding price-to-earnings ratios of 50, 37, and 28 times based on current stock prices [4]

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative return of over 20% within the next six months [8]. Core Views - The company achieved a revenue of 861 million yuan in the first half of 2025, representing a year-on-year increase of 8.1%, with a net profit attributable to shareholders of 191 million yuan, up 3.3% year-on-year [1]. - The second quarter of 2025 showed significant improvement, with revenue reaching 477 million yuan, a year-on-year increase of 3.5% and a quarter-on-quarter increase of 24.5% [2]. - The company's profitability improved significantly, with a gross margin of 39.8% in the first half of 2025, and a net profit margin of 22.3% [3]. - The company is positioned to benefit from the growing ASIC industry, with expectations of increased demand for chip inductors as major tech companies accelerate the deployment of self-developed ASIC chips [4]. Financial Performance - In the first half of 2025, the company recorded a net cash flow from operating activities of 260 million yuan, a year-on-year increase of 119.6%, indicating ongoing improvement in cash flow [3]. - The company’s revenue is projected to grow significantly, with estimates of 1.16 billion yuan in 2023, 1.66 billion yuan in 2024, and 2.02 billion yuan in 2025, reflecting growth rates of 8.71%, 43.54%, and 21.18% respectively [6]. - The estimated net profit attributable to shareholders is expected to reach 255.77 million yuan in 2023, 375.72 million yuan in 2024, and 453.01 million yuan in 2025, with growth rates of 32.48%, 46.90%, and 20.57% respectively [6]. Market Position and Growth Drivers - The company has established long-term partnerships with major brands such as BYD, Gree, Huawei, and MPS, enhancing its market position in the soft magnetic powder core segment [4]. - The company is expanding its customer base in the chip inductor segment, having formed new partnerships with globally recognized manufacturers [4]. - The anticipated growth in the ASIC market, particularly in AI servers, is expected to provide new growth opportunities for the company's chip inductor products [4].

Group 1: Company Overview and Business Segments - The company operates in three main business segments: permanent magnet, soft magnet, and inductance [2] - The permanent magnet ferrite segment has a production capacity of 50,000 tons, with applications in automotive, variable frequency appliances, and power tools [2][3] - The soft magnet production capacity is nearing 10,000 tons, with ongoing construction of a factory in Thailand [2][4] Group 2: Market Position and Competitive Landscape - The competitive landscape for permanent magnet ferrite is characterized by multi-level differentiation, regional concentration, and technology-driven dynamics [3] - China is the largest producer of permanent magnet ferrite, with significant production concentrated in Anhui and Zhejiang provinces [3] - The company aims to increase its permanent magnet capacity from 45,000 tons to 60,000 tons through technological upgrades [3] Group 3: Demand Trends and Future Outlook - Demand for permanent magnet ferrite is expected to maintain stable growth due to its core role in DC motors and adaptability to technological advancements [3] - The company plans to enhance its soft magnet product applications in electric vehicles and power modules, focusing on international expansion and supply chain optimization [4] Group 4: Inductance Business Development - The company is developing chip inductors and automotive inductors, with chip inductors positioned as a second growth curve [5][6] - Initial orders for chip inductors have begun small-scale delivery, with ongoing product validation and factory assessments [5][6] - The automotive sector's increasing electronic demands are driving growth in the automotive inductor market [5] Group 5: Shareholder Actions and Corporate Governance - The company disclosed a plan for its actual controller and board members to reduce their holdings by up to 1,195,000 shares, representing no more than 1.0312% of total shares [6] - This reduction is primarily for personal financial needs and does not reflect concerns about the company's operational outlook [6]

Investment Rating - The investment rating for the company is "Buy" (maintained) [5] Core Views - The report highlights that revenue has slightly decreased due to the impact of the Spring Festival, and it anticipates a trend towards the industrialization of amorphous motors [5] - The company is expected to benefit from the ongoing demand for amorphous materials overseas, with a significant customer base in India and South Korea, and it has become the largest supplier of amorphous alloy strips in the industry with an annual design capacity of 105,000 tons [7] - The demand for nanocrystalline materials and soft magnetic powder cores is expected to grow, driven by the upgrading of magnetic material performance requirements and the resonance with emerging industries such as new energy vehicles [7] Financial Performance and Forecast - In Q1 2025, the company achieved revenue of 421 million yuan, a year-on-year decrease of 4.9% and a quarter-on-quarter decrease of 17.8%. The net profit attributable to the parent company was 79 million yuan, a year-on-year increase of 4.3% [7] - The report projects the company's net profit attributable to the parent company for 2025-2027 to be 410 million, 475 million, and 555 million yuan respectively, with year-on-year growth rates of 13.4%, 16.0%, and 16.9% [7][8] - The company's earnings per share (EPS) are forecasted to be 3.41 yuan in 2025, 3.96 yuan in 2026, and 4.63 yuan in 2027 [6][8] Valuation Metrics - The price-to-earnings (P/E) ratio is projected to be 29, 25, and 21 for the years 2025, 2026, and 2027 respectively [7][9] - The report indicates that the company is expected to maintain a gross margin of approximately 30.7% in 2025, with a net margin of around 19.26% [9]

Investment Rating - The report upgrades the investment rating to "Buy" with a target price of 52.2 CNY per share, reflecting a potential upside of over 20% from the current price of 40.22 CNY [7][11]. Core Insights - The company achieved impressive financial results in 2024, with revenue of 1.663 billion CNY, a year-on-year increase of 43.5%, and a net profit of 376 million CNY, up 46.9% year-on-year [1][5]. - The growth in revenue is driven by the strong performance of chip inductors, which saw a remarkable year-on-year increase of 275.8% in 2024 [2][4]. - The company is well-positioned to benefit from the increasing demand in high-performance computing and renewable energy sectors, establishing long-term partnerships with major brands like BYD, Gree, and Huawei [4][11]. Financial Performance - In 2024, the company reported a gross margin of 40.4%, an increase of 1.2 percentage points year-on-year, with a net margin of 22.5%, up 0.4 percentage points year-on-year [3]. - The first quarter of 2025 showed a revenue of 383 million CNY, a year-on-year increase of 14.4%, although it experienced a quarter-on-quarter decline of 12.1% due to seasonal factors [1][3]. - The company’s EBITDA for 2024 is projected at 633.31 million CNY, with a net profit forecast of 375.72 million CNY for the same year [6][14]. Growth Drivers - The company is expanding its production capacity for chip inductors, with a target of 20 million pieces per year, which is expected to alleviate capacity constraints and contribute significantly to revenue growth [4][11]. - The ongoing development of new product lines, including the fifth generation of iron-silicon magnetic powder cores, is anticipated to enhance the company's competitive edge in the market [4][11]. - The establishment of a production base in Thailand is expected to further support the company's growth in international markets [4][11]. Valuation Metrics - The projected price-to-earnings (P/E) ratio for 2025 is 23.11, which is below the industry average of 34x, indicating potential undervaluation [11][12]. - The report suggests a target P/E of 30x for 2025, leading to a market capitalization estimate of 150.6 billion CNY [11][12].