GuoTai HaiTong Securities has initiated coverage on Tiangong Int'l (00826) with an "Outperform" rating and a target price of HK$5.20.
The firm projects the company's earnings per share for 2026-2028 to be RMB 0.23, RMB 0.37, and RMB 0.45, respectively. Based on a 2026 average price-to-earnings ratio of 26.93x for comparable companies, it assigns Tiangong a 2026 P/E of 20x, corresponding to the HK$5.20 target price (RMB 4.53, using an exchange rate of 1 HKD = 0.87 CNY).
The key points from the research report are as follows.
Catalyst: Expansion Project Announcement
On July 7, 2026, Tiangong International issued a voluntary announcement stating that its indirect subsidiary, Jiangsu Tiangong Cemented Carbide Technology Co., Ltd., has commenced a capacity expansion project for "300 tons per year of ultra-fine grain PCB tool-specific rod material."
The company indicated that AI computing infrastructure and server upgrades are driving rapid growth in PCB demand. This project is expected to help solidify its supply chain advantages in high-end and cutting-edge downstream sectors in advance and enhance profitability.
Project Validates Material Platform Capability
The 300-ton expansion project validates the company's "material platform" capability, further broadening its business scope.
The company has long been deeply involved in advanced materials such as special steel, high-speed steel, cemented carbide, and titanium alloys, possessing capabilities in powder metallurgy, material preparation, and precision machining.
If this PCB ultra-fine grain rod project proceeds smoothly into production and is adopted by downstream PCB tool customers, the company is poised to embark on a new high-growth trajectory leveraging the high-demand materials for AI applications.
Titanium Alloy Business Scaling Up
The ramp-up of the titanium alloy business, driven by surging 3C demand, presents a significant growth opportunity.
Progress on Apple's first foldable iPhone is accelerating, with reports from the Shanghai Securities News indicating it is already in the mass production stage.
The report suggests that the production of foldable devices is expected to boost demand for titanium alloy powder within the 3C industry.
It is anticipated that, through its comprehensive and deep vertical integration in the consumer electronics titanium alloy sector, the company has become a core raw material supplier for downstream 3C manufacturers.
Recent strategic discussions between Tiangong and Han's Laser in the 3D printing field indicate that the titanium alloy powder materials produced by Tiangong are accelerating their entry into high-precision, lightweight-demanding 3C consumer electronics applications, such as phone hinges and thin frames.
Key Risk Factors
Potential risks include weaker-than-expected demand in consumer electronics and high-end sectors, macroeconomic and geopolitical uncertainties, and slower-than-anticipated progress in downstream adoption.
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