ToLand(300855)2025-04-21 03:00Summary of the Conference Call for Tunan Co., Ltd. Company Overview - Company: Tunan Co., Ltd. - Industry: Aerospace and Defense Key Points and Arguments Financial Performance - Tunan Co., Ltd. experienced a revenue decline of 9% and a net profit drop of 19% in 2024, primarily due to short-term fluctuations in downstream demand and delayed delivery schedules [4][14][35]. - The fourth quarter of 2024 marked a low point with revenues of 178 million yuan, a 44% year-on-year decrease, and a net profit of 9 million yuan, down 87% [14][36]. - In contrast, the first quarter of 2025 showed significant recovery with revenues of 286 million yuan and a net profit of 42 million yuan, indicating a positive trend moving forward [15][36]. Business Segments - Tunan's core business includes deformed high-temperature alloys and cast high-temperature alloys. In 2024, deformed high-temperature alloys accounted for 41.5% of revenue, while cast high-temperature alloys contributed 33.1% [16][37]. - The gross margin for cast high-temperature alloys was 49.3%, significantly contributing to overall profitability despite a decline in its revenue share [16][37]. Future Growth Prospects - The company is expected to enter a rapid growth phase from 2025 to 2027, driven by the production contributions from its subsidiaries in Shenyang, which are set to begin operations in 2025 [3][19][26]. - Tunan's investment in its Shenyang subsidiaries totals approximately 10.1 billion yuan, with expected output of around 2 billion yuan from the Tunan Components project [19][38]. Market Dynamics - The global civil aviation market is projected to grow significantly over the next 20 years, with a market size of approximately 1.5 trillion [6][28]. - The domestic aviation market is currently dominated by foreign products, but increasing penetration of domestic aircraft like the C919 is expected to create substantial growth opportunities [6][28]. Competitive Landscape - The C919 aircraft is positioned to compete directly with the Airbus A320 and Boeing 737, with increasing domestic production capabilities expected to enhance market share [8][30]. - The U.S.-China trade tensions have led to a shift in purchasing preferences among Chinese airlines towards Airbus and domestic aircraft, impacting Boeing's market position [5][27]. Investment Outlook - Tunan Co., Ltd. is projected to achieve a compound annual growth rate (CAGR) of over 30% in revenue and earnings from 2025 to 2027, with significant peaks expected in 2026 and 2027 [22][42]. - Current valuations are considered to be at a low point, with potential for substantial upside as the company recovers from recent performance dips [22][42]. Additional Important Insights - The aerospace materials sector, particularly high-temperature alloys, remains critical for engine manufacturing, with Tunan's expertise in material development providing a competitive edge [39]. - The tightening of supply chains and increased domestic production capabilities are expected to enhance Tunan's market position in the aerospace sector [31][32]. This summary encapsulates the key insights from the conference call regarding Tunan Co., Ltd.'s financial performance, market dynamics, competitive landscape, and future growth prospects.