China Tungsten And Hightech Materials (000657) Q2 2024 earnings summary

Executive summary

• Revenue for H1 2024 reached ¥6.81 billion, up 3.98% year-over-year, while net profit attributable to shareholders dropped 39.3% to ¥146.96 million.

• Gross margin for the hard alloy segment was 14.49%, down 1.47 percentage points year-over-year.

• Operating cash flow was negative at -¥528 million, a further decline from -¥319 million in H1 2023.

• The company remains the world’s largest producer of hard alloys, with output near 7,200 tons in the period.

• Significant R&D investment (¥269.83 million, up 24.78% year-over-year) led to 95 new patent applications and 89 authorizations.

Financial highlights

• Revenue: ¥6.81 billion (+3.98% YoY); net profit: ¥146.96 million (-39.3% YoY); EPS: ¥0.1052 (-39.26% YoY).

• Gross profit: ¥1.02 billion; gross margin: 14.49% (down 1.47 ppts YoY).

• Operating cash flow: -¥528 million; total assets: ¥13.80 billion (+6.32% from year-end 2023).

• R&D expense: ¥269.83 million (+24.78% YoY); financial expenses surged 275.74% due to lower forex gains.

• Domestic sales grew 11.29% YoY; export sales fell 15.57% YoY.

Outlook and guidance

• Management expects continued growth in high-end manufacturing and new energy sectors, but notes short-term pressure from intense competition and slow high-end product penetration.

• The company will focus on product structure optimization, cost reduction, and expanding high-value-added product sales.