Western Superconducting Technologies (688122) H1 2024 earnings summary

Executive summary

• Revenue for H1 2024 was ¥2.02 billion, down 4.33% year-over-year; net profit attributable to shareholders was ¥348 million, down 17.24% year-over-year.

• High-end titanium alloy revenue was ¥1.28 billion, down 4.07%; superconducting products revenue was ¥482 million, up 19.95%; high-performance superalloy revenue was ¥156 million, down 44.67%.

• R&D investment increased 38.96% year-over-year to ¥175 million, accounting for 8.67% of revenue.

• Total assets at June 30, 2024, were ¥12.82 billion, up 6.11% from year-end 2023; net assets attributable to shareholders were ¥6.27 billion, down 0.91%.

Financial highlights

• Operating cash flow was ¥115 million, up 130.61% year-over-year due to improved collections and reduced procurement outflows.

• Basic and diluted EPS were ¥0.5364, down 17.25% year-over-year.

• Gross margin for H1 2024 was 32.04%, down from 32.28% in H1 2023.

• R&D expenses rose to ¥179 million, up 37.68% year-over-year.

• Non-recurring gains totaled ¥36.83 million, mainly from government subsidies and fair value changes.

Outlook and guidance

• The company will continue to increase R&D investment and focus on expanding applications for high-end titanium alloys and superconducting products.

• Management expects continued growth in superconducting product demand and further cost reductions in superalloy production.

• Risks include high customer concentration, long R&D and payment cycles in the aerospace sector, raw material price volatility, and macroeconomic uncertainties.