Zhongwu Gaoxin: Due to changes in the company's consolidation scope, net profit in 2024 is expected to be up 75%-87.8% YoY.

On the evening of January 16, China Tungsten High-tech released an announcement stating that from January 1, 2024, to December 31, 2024, the net profit attributable to shareholders of the publicly listed firm is expected to be 848 million yuan to 910 million yuan, representing a YoY increase of 75%-87.8%. The net profit after deducting non-recurring gains and losses is estimated to be 169 million yuan to 200 million yuan, reflecting a YoY decrease of 40.13%-49.56%. Basic earnings per share are projected to be 0.41 yuan/share to 0.44 yuan/share.

Note 1: In 2024, the company acquired 100% equity of Hunan Shizhuyuan Nonferrous Metals Co., Ltd. (hereinafter referred to as Shizhuyuan Company) through the issuance of shares and payment in cash. As of December 27, 2024, the 100% equity of Shizhuyuan Company had been transferred to the company, and the industrial and commercial registration change was completed. Shizhuyuan Company was included in the company's consolidated financial statements on December 27, 2024. According to the relevant provisions of the "Accounting Standards for Business Enterprises," the company retrospectively adjusted the figures for the same period of the previous year based on the principle of business combination under common control.

Note 2: According to the "Explanatory Announcement No. 1 on Information Disclosure by Companies Offering Securities to the Public—Non-recurring Gains and Losses (2023 Revision)," the net profit or loss of a subsidiary from the beginning of the period to the merger date, arising from a business combination under common control, is reported as non-recurring gains and losses.

Note 3: According to the "Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No. 9—Calculation and Disclosure of Return on Equity and Earnings Per Share (2010 Revision)," if a business combination under common control occurs during the reporting period and the acquirer issues new shares as consideration on the merger date, the basic earnings per share at the end of the reporting period should treat the shares as if they had been issued at the beginning of the merger period (weighted at 1). When calculating the basic earnings per share for the comparative period, the shares should be treated as if they had been issued at the beginning of the comparative period.

Regarding the reasons for performance changes, China Tungsten High-tech stated: In 2024, the net profit attributable to shareholders of the publicly listed firm increased by 75%-87.8% compared to the disclosed figures for 2023, mainly due to changes in the company's consolidation scope. In 2024, the company implemented a project to acquire 100% equity of Hunan Shizhuyuan Nonferrous Metals Co., Ltd. through the issuance of shares and payment in cash, along with raising supporting funds. On December 27, 2024, the 100% equity of Shizhuyuan Company was transferred to the company. As a result, the scope of the company's consolidated financial statements changed during the reporting period. In 2024, the net profit after deducting non-recurring gains and losses decreased by 40.13%-49.56% compared to the disclosed figures for 2023, primarily due to the following reasons: First, insufficient downstream demand, intensified competition in the cemented carbide market, and a decline in product selling prices, combined with rising costs of raw and auxiliary materials, led to a YoY decrease in net profit for cemented carbide products. Second, according to relevant regulations, the net profit of Shizhuyuan Company for 2024 was entirely classified as non-recurring gains and losses. Previously, an investor asked on the investor interaction platform: "Can China Tungsten High-tech rank first globally in terms of production scale for tungsten resources and tungsten carbide?" On December 25, 2024, China Tungsten High-tech responded on the investor interaction platform, stating that the Shizhuyuan mine acquired in this transaction has retained resource reserves of 1.9 billion mt, with tungsten metal content of 560,000 mt, accounting for over 30% of China's tungsten resource reserves. Its industrial minable reserves rank first globally. The company's annual production of cemented carbide is approximately 14,000 mt, maintaining the world's largest production scale.

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Reviewing the historical price trends of the tungsten industry chain in 2024 reveals:

For black tungsten concentrate (≥65%), the average price on December 29, 2023, was 122,500 yuan/mtu, while the average price on December 31, 2024, was 142,750 yuan/mtu, reflecting an annual increase of 20,250 yuan/mtu and an annual growth rate of 16.53%.

For ammonium paratungstate (domestic), the average price on December 29, 2023, was 181,000 yuan/mt, and the average price on December 31, 2024, was 210,500 yuan/mt, showing an annual increase of 29,500 yuan/mt and an annual growth rate of 16.3%.

For tungsten carbide powder (domestic), the average price on December 29, 2023, was 266.5 yuan/kg, and the average price on December 31, 2024, was 309.5 yuan/kg, reflecting an annual increase of 43 yuan/kg and an annual growth rate of 16.14%.

Mainly influenced by tight raw material supply, the price center of the tungsten industry chain overall shifted upward in 2024. Entering 2025, the overall supply in the tungsten market remains tight. On January 17, the price center of some products in the tungsten industry chain moved upward, with slight increases observed in the prices of ammonium paratungstate (domestic), ferrotungsten, and tungsten carbide powder. Currently, large-scale stockpiling procurement in the tungsten downstream market has not yet materialized. Many smelters have begun to gradually suspend production for maintenance. Amid the ongoing tug-of-war between cost support and the lack of significant demand growth, the differentiation between upstream and downstream segments of the industry chain has become increasingly pronounced. With the year-end effect becoming evident, although there are slight upward price intentions in certain regions, actual transactions remain challenging, and the market's supply-demand alignment is poor. Most actual transactions in the tungsten market are still negotiated based on rigid demand, resulting in limited driving force from the demand side. SMM predicts that tungsten prices may exhibit a relatively stable with strong trend in the future, supported by tight raw material supply.