PRCO(002225) 华泰证券·2025-04-18 04:35Investment Rating - The investment rating for the company is "Accumulate" with a target price of RMB 6.00 [8][9]. Core Views - The company reported a revenue of RMB 519 million and a net profit attributable to the parent of RMB 14 million for the year 2024, representing a year-on-year decline of 5.1% and 45.5% respectively. The fourth quarter saw revenues of RMB 119 million and a net profit of RMB 1 million, down 16.4% and 69.7% year-on-year. The lower net profit was attributed to a significant increase in expense ratios [1]. - The company’s product segments showed varied performance, with non-shaped refractory materials, shaped refractory materials, and functional refractory materials generating revenues of RMB 1.07 billion, RMB 1.87 billion, and RMB 1.36 billion respectively, reflecting year-on-year changes of -3.4%, -10.4%, and +8.5%. The overall gross margin decreased by 0.9 percentage points to 19.0% due to weak downstream demand and falling prices, although the gross margin improved to 20.2% in Q4 [2]. - The company’s operating expenses increased, with a total expense ratio of 16.9%, up 2.5 percentage points year-on-year. The financial expense ratio rose mainly due to exchange losses, while the R&D expense ratio increased due to the development of active magnesium oxide. However, the company maintained a healthy operating cash flow of RMB 430 million, up 12.4% year-on-year [3]. - The overseas operations are stabilizing, with overseas revenue reaching RMB 1.45 billion, accounting for 28.0% of total revenue, an increase of 1.1 percentage points year-on-year. The U.S. factory's revenue grew by 72% year-on-year, and the Serbian factory is also performing well. The company is expanding its market for efficient precipitation agents in nickel and cobalt extraction, which is expected to contribute to revenue growth in 2025 [4]. - Due to the pressure on traditional steel industry demand, the company has adjusted its sales volume assumptions, forecasting net profits of RMB 260 million, RMB 300 million, and RMB 350 million for 2025-2027, down 11% and 9% for 2025 and 2026 respectively. The target price has been raised to RMB 6.00 based on a 24x PE for 2025 [5]. Summary by Sections - Revenue and Profitability: The company reported a revenue of RMB 519 million and a net profit of RMB 14 million for 2024, with significant declines in Q4 [1]. The product revenue breakdown showed mixed results, with overall gross margin declining to 19.0% [2]. - Expenses and Cash Flow: The total expense ratio increased to 16.9%, with a healthy operating cash flow of RMB 430 million [3]. - Overseas Operations and Growth Potential: Overseas revenue reached RMB 1.45 billion, with significant growth in the U.S. and Serbia, and new product lines expected to drive future growth [4]. - Forecast and Valuation: Adjusted profit forecasts for 2025-2027 reflect a cautious outlook, with a revised target price of RMB 6.00 [5].