Huarui Precision(688059) 华创证券·2024-11-03 16:13Investment Rating - The report maintains a "Strong Buy" rating for the company, with a target price of 62.80 CNY, compared to the current price of 46.48 CNY [1]. Core Views - The company's Q3 performance was below expectations, with a revenue of 1.74 billion CNY, down 24.46% year-on-year, and a net profit of 0.05 billion CNY, down 88.17% year-on-year. The decline is attributed to weak manufacturing demand and lower gross margins due to insufficient capacity utilization [1]. - The report highlights the significant potential for domestic substitution in the cutting tool market, with the overseas market being a crucial growth area. The company has seen a 60.90% increase in overseas revenue in 2023 [1]. - Future revenue projections for 2024-2026 have been adjusted downwards due to anticipated manufacturing conditions and raw material price increases, with expected revenues of 8.37 billion CNY, 10.13 billion CNY, and 12.90 billion CNY respectively [1]. Financial Summary - For the first three quarters of 2023, the company achieved total revenue of 5.85 billion CNY, a decrease of 0.52% year-on-year, and a net profit of 0.77 billion CNY, down 27.06% year-on-year [1]. - The gross margin for Q1-Q3 was 39.64%, down 4.46 percentage points year-on-year, while the net margin was 13.18%, down 4.80 percentage points year-on-year [1]. - The company’s projected earnings per share (EPS) for 2024, 2025, and 2026 are 1.83 CNY, 3.14 CNY, and 4.09 CNY respectively [2].