Huarui Precision(688059) 国金证券·2024-10-31 00:00Investment Rating - The report maintains a "Buy" rating for the company, anticipating a recovery in profitability and performance alongside the cyclical recovery of the manufacturing sector [4]. Core Views - The company's performance in Q3 2024 was significantly impacted by the seasonal downturn in the industry and low manufacturing sentiment, with a year-on-year revenue decrease of 24.46% and a net profit decline of 88.17% [2][3]. - The tool industry is viewed as a leading sector for cyclical recovery, with expectations that improved capacity utilization will enhance profitability once the industry sentiment reverses [3]. - The report adjusts profit forecasts for 2024 to 2026, projecting net profits of 1.29 billion, 2.09 billion, and 2.58 billion RMB respectively, reflecting a recovery in the manufacturing sector due to government stimulus policies [4]. Summary by Sections Company Performance - For Q3 2024, the company reported revenue of 1.74 billion RMB, down 24.46% year-on-year, and a net profit of 0.05 billion RMB, down 88.17% year-on-year [1][2]. - The overall revenue for the first nine months of 2024 was 5.85 billion RMB, a slight decrease of 0.52% compared to the previous year [1]. Industry Context - The manufacturing sector's profitability has declined by 3.5% year-on-year in the first nine months of 2024, with a notable drop of 27.1% in September [2]. - The tool industry is considered a barometer for manufacturing sentiment, and despite current challenges, it is expected to be a priority sector for recovery as economic stimulus measures are implemented [3]. Financial Projections - The company is expected to achieve net profits of 1.29 billion RMB in 2024, 2.09 billion RMB in 2025, and 2.58 billion RMB in 2026, with corresponding price-to-earnings ratios of 24X, 15X, and 12X respectively [4]. - The report indicates a potential for a "double boost" in profitability and valuation recovery as the industry sentiment improves [3].