CHINA TUNGSTEN HIGHT(000657) 国泰君安·2024-04-29 14:31Investment Rating - The report maintains a Buy rating for the company, with a target price of 12.80 CNY (up from the previous target of 12.14 CNY) [1][18] - The company's current price is 10.71 CNY, indicating a potential upside [1][18] Core Views - The company is a leader in the hard alloy industry and is actively expanding its upstream resources, which will enhance its integrated advantages [18] - With the gradual recovery of downstream demand, the company's performance is expected to improve as blade and tool production capacity is released [18] - The company's profit margins were squeezed in 2023 due to weak consumption, intensified industry competition, and rising raw material costs [18] - The company's revenue and gross margin improved in 2024Q1, driven by better cost control, although product gross margins declined, weighing on performance [18] Financial Forecasts - Revenue is expected to grow from 12,736 million CNY in 2023A to 15,645 million CNY in 2026E, with a CAGR of 7% [1][18] - Net profit (attributable to parent company) is forecasted to increase from 485 million CNY in 2023A to 769 million CNY in 2026E, with a CAGR of 15% [1][18] - EPS is projected to rise from 0.35 CNY in 2023A to 0.55 CNY in 2026E [1][18] Profitability and Valuation Metrics - Operating profit margin is expected to improve from 4.9% in 2023A to 7.3% in 2026E [1][18] - ROE is forecasted to increase from 8.4% in 2023A to 11.6% in 2026E [1][18] - ROIC is projected to rise from 5.8% in 2023A to 8.6% in 2026E [1][18] - EV/EBITDA is expected to decline from 12.36x in 2023A to 10.72x in 2026E [1][18] Industry and Company Overview - The company operates in the metals, mining, and products sector, with a focus on tungsten [1][18] - It has a complete industrial chain, from mining to deep processing, and aims to build a world-class tungsten industry group [1][18] - The company's key mines include Shizhuyuan and Xianglushan, which are among the top tungsten mines in China [1][18] Key Financial Data - Total assets stood at 11,697 million CNY in 2022A, with fixed assets accounting for 3,402 million CNY [1] - Net debt ratio was 91.1% in 2022A, indicating a relatively high level of leverage [1] - Free cash flow was negative at -230 million CNY in 2022A, primarily due to increased capital expenditures [1] Market Performance - The stock's 52-week price range is 6.77-13.48 CNY, with a current market capitalization of 14,966 million CNY [2][18] - The stock has shown absolute price returns of 8% over the past month and 25% over the past three months [18]