Investment Rating - The report assigns an "Accumulate" investment rating for the company [3][7]. Core Insights - The company is a leader in heavy die-cutting tools with nearly thirty years of technical accumulation in metal material processing and heat treatment, maintaining its position as a global leader for over a decade [1][11]. - The acquisition of German company SMS is expected to significantly enhance the company's capabilities in high-precision grinding machines, contributing to cost optimization and efficiency improvements in ball screw production, which will be a key growth driver for future business [1][7]. - The company has a strong focus on developing intelligent CNC equipment and has successfully launched key rolling functional components, indicating a strategic expansion into high-end manufacturing [7][11]. Financial Data and Valuation - The company’s total revenue is projected to grow from 5.42 billion yuan in 2023 to 9.00 billion yuan by 2027, with a compound annual growth rate (CAGR) of approximately 16% [2][7]. - The net profit attributable to shareholders is expected to increase from 870 million yuan in 2023 to 1.20 billion yuan in 2027, reflecting a significant growth trajectory [2][7]. - The company’s price-to-earnings (PE) ratio is projected to decrease from 83.7 in 2023 to 79.0 in 2027, indicating improving valuation metrics over time [2][7]. Business Overview - The company’s main business segments include metal cutting tools, intelligent equipment, and rolling functional components, with metal cutting tools accounting for over 80% of total revenue [7][22]. - The metal cutting tools segment is characterized by stable demand and repeat consumption, with a market space that continues to grow [7][19]. - The intelligent CNC equipment segment has shown rapid growth, with a revenue increase of 53.66% year-on-year in 2024, indicating successful market penetration [7][68]. - The rolling functional components segment is also expanding, with a revenue growth of 59.96% in 2024, reflecting the company's strategic investments in this area [7][76]. Market Potential - The global market for metal cutting tools is projected to reach 41.64 billion USD by 2029, with a CAGR of 6.9% from 2025 to 2029, highlighting significant growth opportunities for the company [36]. - The domestic market for cutting tools in China is expected to continue its upward trajectory, with a market size of approximately 53.8 billion yuan in 2023, growing at a CAGR of 7.9% from 2005 to 2023 [36][39]. - The company is well-positioned to capitalize on the high-end equipment import substitution trend, as the domestic market for high-end CNC machines remains underdeveloped compared to international standards [63][64].