The

industry cycle bottoms out, and the overseas strategy is effective to open the second growth curve

In 2024, the prosperity of the tool industry is in the stage of rebounding at the bottom, and the current policies introduced by the state to promote equipment renewal, stimulate consumption and optimize local debt will strongly promote economic recovery and market demand growth in 2025. As a basic consumable, the tool industry is expected to be the first to benefit from the recovery of the downstream processing industry. The company has laid out production capacity and terminal channels in advance during the economic downturn, and is ready to fully meet the market recovery through inventory digestion and product structure upgrading. In the first three quarters of 2024, the overseas market revenue of Okeyi reached 166 million yuan, a year-on-year increase of 44.2%, of which the export revenue of CNC tools was about 140 million yuan. The company plans to set up subsidiaries in Europe to radiate the European and American markets, drive sales in the surrounding regional markets through localized development, and consolidate the growth trend of the Asian and European markets; By setting up service and warehousing centers, we will further increase our overseas market share; Go deep into the local market to provide technical services, explore high-quality targets, seek opportunities for resource integration, and achieve leapfrog development of overseas business.

▌Short-term performance is under pressure, product structure optimization releases operating leverage

In Q1-Q3 of 2024, the profitability of Okeyi is under certain pressure. The company's gross sales margin was 25.83%, down 6.71pct year-on-year, and net profit margin was 10.00%, down 9.83pct year-on-year. This phenomenon is mainly due to the increase in unit costs due to the incomplete saturation of some of the company's production capacity, the low gross profit margin in the initial stage of new product production, and the increase in expenses during the period. As of the first half of 2024, the company has added more than 2,200 varieties of solid tools and more than 2,000 varieties of CNC blades and cutter body tools, showing the company's continuous investment in new product research and development. From the perspective of product structure, the company focuses on the key products and core business of high-end CNC tools, and the first three quarters of the CNC tool business achieved revenue of 489 million yuan, a year-on-year increase of 3.18%, and the gross profit margin reached 34.2%, of which the gross profit margin of self-produced CNC blades was about 42%. At the same time, gradually realize the upgrade and layout from a single blade sales to a comprehensive product series of CNC tools, with the continuous optimization of product structure and the launch of high-end products, the company's profitability is expected to gradually improve.

▌The whole package model deepens the terminal penetration, and the high-end application opens up the valuation spaceThe company has increased the terminal layout, and further improved the tool product series in many key areas by expanding the application scenarios of the overall solution. In 2024, BMW's crankshaft turnkey project has entered stable operation, which will have a great demonstration effect on the company's undertaking of large-scale turnkey projects, especially the turnkey business of the automotive industry chain. For the automobile manufacturing, aerospace, rail transit and wind power industries, the company has launched tool solutions suitable for the processing of engine parts, casing blades, turnout axles, flange planetary wheels, etc.; Starting from the needs of existing customers, we will extend the development of supporting tool products, and gradually complete the series of semi-finishing, finishing, crankshaft, screw, thread tools and high-performance milling and drilling tools, and improve the overall program matching; Service centers have been established in many regions across the country to strengthen terminal development and technical support, strengthen the direct development of end customers, and promote the rapid improvement of the company's terminal business. The company's application scenarios in the high-end field continue to expand, laying a solid foundation for future performance growth. Although the current performance is affected by the industry cycle, the company is expected to achieve solid growth in the medium to long term as downstream demand recovers and the company's strategy continues to advance.

Profit forecast

It is predicted that the company's revenue from 2024 to 2026 will be 11.88, 14.35, and 1.729 billion yuan respectively, EPS will be 0.83, 1.20, and 1.61 yuan respectively, and the corresponding PE of the current stock price will be 21.7, 15.1, and 11.2 times respectively. The company is mainly engaged in the research and development, production and sales of CNC tool products and cemented carbide products, considering that the company is in the "cycle recovery + product upgrade + overseas breakthrough" three-hit resonance node, is expected to promote performance growth; Covered for the first time, with a "buy" investment rating.

Risk Warning:

Intensified market competition; managing risk for rapid expansion; risk of technical leakage; changes in downstream demand; changes in industry policies in downstream application fields; fluctuations in raw material prices; Gross margin fluctuation.