Core Viewpoint - The report from Dongfang Securities indicates that Shengde Xintai's net profit attributable to shareholders for the first half of the year was 84.56 million yuan, a year-on-year decrease of 31.36% due to rising raw material prices and significant provisions for bad debts affecting profitability [1] Financial Performance - Shengde Xintai's main business, stainless steel pipes, experienced a gross margin decline of 6.48 percentage points compared to the same period last year due to increased raw material costs [1] - The company reported a substantial provision for accounts receivable bad debt losses, which further impacted its profitability [1] Future Prospects - Despite the current challenges, the company remains optimistic about its performance potential, supported by recent project wins including the "Orient Electric 2025 June to September small pipe framework procurement" and notifications for steel pipe needs from various thermal power projects, which together account for approximately 17% of 2024 revenue [1] - The company anticipates record high orders and deliveries for super stainless steel in 2024, with total stainless steel deliveries expected to exceed 20,000 tons [1] - Continuous shipments of high-end stainless steel products are expected to help restore the company's gross margin levels, indicating strong performance potential [1] Strategic Initiatives - The company is committed to ongoing R&D investments to build a competitive "moat," with high-performance products expected to tap into significant market opportunities [1] - The company is also expanding into the automotive parts industry to create a second growth curve for profitability [1] Valuation - Using the DCF method, the company has a target price of 39.41 yuan, maintaining a "buy" rating [1]