After a volume surge of nearly 40% over 7 trading days, TIANGONG INT'L (00826) released its interim results on August 25. According to the performance announcement, TIANGONG INT'L achieved revenue of RMB 23.42 billion in the first half of 2025, with net profit attributable to shareholders of RMB 2.04 billion, representing a year-on-year growth of 10.87% and achieving double-digit profit growth.
For those with deep understanding of the current industry environment, the "quality" of TIANGONG INT'L's performance becomes apparent, as it demonstrated strong business resilience under "headwind" conditions. This is attributed to the company's long-term commitment to product premiumization strategy entering its harvest period, particularly in powder metallurgy, where the established platform has achieved multi-dimensional commercialization of powder metallurgy technology. This indicates that TIANGONG INT'L continues to lead China's powder metallurgy path in high-end manufacturing, with its value being increasingly discovered and valued by the market.
**Domestic Market Serves as "Ballast Stone" for Steady Performance Development**
In the first half of 2025, due to continued global geopolitical instability and intensified trade frictions, the complexity and uncertainty of the global economy remained deeply intertwined. China's export trade faced more complex challenges, putting relatively significant pressure on export enterprises' operations. TIANGONG INT'L was inevitably affected, with export revenues across various product lines declining to different degrees.
However, domestic economic development momentum remained steady. According to National Bureau of Statistics data, China's GDP growth rate in the first half of 2025 was 5.3%, up 0.3 percentage points year-on-year. The added value of above-scale high-tech manufacturing industry grew 9.7% year-on-year, with transportation equipment manufacturing, electrical machinery and equipment manufacturing showing double-digit growth rates of 11.4%, 10.1%, and 11.4% respectively. This led to a warming trend in domestic specialty steel demand.
As a leading specialty steel enterprise continuously focusing on high-end products, TIANGONG INT'L benefited from the domestic specialty steel demand recovery. During the reporting period, the domestic market became TIANGONG INT'L's "ballast stone" for steady development. According to financial reports, TIANGONG INT'L's domestic revenue in the first half of 2025 was RMB 13.32 billion, showing slight growth year-on-year, with domestic revenue maintaining a high proportion of 56.87% of total company revenue. This is one of the key factors demonstrating TIANGONG INT'L's business resilience.
Notably, revenue from Asian regions excluding China grew 26.22% to RMB 3.61 billion, with Asia expected to become TIANGONG INT'L's new growth point at the regional level.
From a product perspective, domestic sales revenue growth of tool and die steel became a significant highlight. During the reporting period, domestic sales revenue of die steel grew 4.7% to RMB 5.66 billion, while high-speed steel domestic sales revenue increased 14.1% to RMB 2.6 billion. This was mainly due to continued demand recovery in domestic automotive, home appliance, and electronics sectors under ongoing equipment renewal policies, combined with rapid development in high-end manufacturing industries such as medical devices and aerospace, which boosted demand growth. Together with product price increases, this drove tool and die steel revenue growth.
Cutting tool domestic sales revenue declined slightly during the reporting period, mainly because TIANGONG INT'L proactively conducted systematic optimization of its sales network and distributor system. While this caused temporary business adjustment, the optimized sales system significantly improved professional capabilities and resource matching, with gradual improvement expected in the second half.
The decline in titanium alloy business revenue was due to reduced sales in consumer electronics. However, the company has added new orders from other application areas to its sales mix to improve capacity utilization. While this may impact revenue in the short term, titanium alloy business is expected to return to growth as covered industries and customer numbers continue to increase.
**Market Environment Improvement in Second Half May Help Fundamental Recovery**
Through the above product line analysis, it's clear that TIANGONG INT'L's tool and die steel domestic sales market is developing steadily, cutting tools have completed proactive optimization and will stabilize and improve in the second half, and titanium alloy business is also under optimization. The company's internal operations are stable with improvement trends, with only external environmental factors constraining performance release.
However, entering the second half of 2025, the overall market environment is expected to improve compared to the first half, mainly for two reasons: First, with smooth progress in trade negotiations between China and the US, customers who chose to wait and see due to intensified trade frictions in the first half have gradually resumed trade. Second, the upcoming US interest rate cut cycle will bring overseas market demand recovery.
Currently, market traders expect an 87% probability of a 25 basis point Fed rate cut in September, within the range of high confidence for rate cuts. Once the Fed cuts rates as market expectations suggest, it will not only boost overseas market demand but may also drive up global raw material prices, benefiting TIANGONG INT'L's ability to raise product prices and enhance profitability.
This means that entering the second half, TIANGONG INT'L's overseas markets are expected to welcome recovery, while domestic markets are expected to continue growing driven by steady economic development. TIANGONG INT'L's market demand may then experience domestic and international resonance upward.
**Multi-dimensional Layout Accelerates Powder Metallurgy Technology Commercialization**
Compared to TIANGONG INT'L's expected fundamental recovery in the second half, what excites the market more is the enormous commercial value demonstrated by TIANGONG INT'L's multi-dimensional layout in powder metallurgy. This is not only TIANGONG INT'L's innovation growth story but also a microcosm of China's manufacturing transformation and upgrading toward high-end manufacturing.
In the global high-end manufacturing competition landscape, powder metallurgy technology is becoming a key factor determining national industrial competitiveness. TIANGONG INT'L broke foreign monopoly lasting half a century in 5 years. From 2021 to the first half of 2025, TIANGONG INT'L's powder metallurgy-related R&D projects totaled 144, with 583 new product developments and 111 invention patent applications.
While innovating China's powder metallurgy technology from "following" to "running alongside" global leading levels, TIANGONG INT'L is also accelerating powder metallurgy technology commercialization from multiple dimensions.
To maximize powder metallurgy technology's commercial value, TIANGONG INT'L has built a complete powder metallurgy technology platform covering three levels: product upgrading, additive manufacturing raw materials, and "bottleneck" material development.
In product upgrading, TIANGONG INT'L continuously enhances its tool and die steel product value through powder metallurgy technology. Benefiting from powder metallurgy technology application in tool and die steel, TIANGONG INT'L's tool and die steel product prices have steadily increased, with die steel average selling price compound growth rate of 7.3% since 2020, and high-speed steel average selling price compound growth rate exceeding 10% during the same period.
Since 2020, TIANGONG INT'L's powder metallurgy tool and die steel sales volume is expected to grow from 83 tons to 1,500 tons in 2025, with annual compound growth rate of 79.2%. Cumulative sales volume is expected to reach 4,098 tons, with average selling price approximately RMB 150,000 per ton and average gross margin above 40%.
Behind these figures is TIANGONG INT'L's successful product value upgrading through powder metallurgy technology, accelerating the company's transformation toward high-end material manufacturing.
In July this year, TIANGONG INT'L signed a cooperation agreement with Hengeda, whereby Hengeda will purchase no less than 100 tons of saw cutting tool special materials from TIANGONG INT'L annually for five years starting from 2026, totaling no less than 600 tons over five years. This means TIANGONG INT'L's powder steel achieved major breakthrough among large domestic customers, which will play a demonstrative role in creating benchmark effects and expanding other new customers.
Meanwhile, TIANGONG INT'L applies powder metallurgy technology to cutting tools, achieving vertical integration development in the cutting tool field. It expanded from upstream high-speed steel to downstream high-speed steel cutting tool production, and after powder metallurgy technology breakthrough, extended to powder metallurgy high-speed steel cutting tools while also covering carbide cutting tools. This made TIANGONG INT'L a one-stop cutting tool solution provider with cost advantages far superior to peers.
Additionally, powder metallurgy technology in product upgrading can achieve transformation from materials to products. Relying on powder metallurgy technology, TIANGONG INT'L created near-net-shape forming processes with material yield rates above 80%. TIANGONG INT'L's integrated die-casting powder die steel breaks 3D printing limitations and can meet large die-casting mold casting components, shortening processing time while significantly improving product service life, substantially enhancing the company's core competitiveness in the market.
In additive manufacturing raw materials, powder metallurgy technology is the performance foundation of additive manufacturing raw materials. TIANGONG INT'L owns the largest powder-making equipment in China, with product particle sizes covering 0-500μm, meeting different forming process requirements. The company has currently deployed four major categories of metal powder materials: high-alloy steel powder, titanium alloy powder, copper alloy powder, and superalloy powder. These metal powder materials can be used in consumer electronics, aerospace, medical devices, liquid cooling and other thermal management products, with high-alloy steel powder being TIANGONG INT'L's core advantage area, with annual capacity of 8,000-10,000 tons.
Notably, TIANGONG INT'L's subsidiary Tiangong Co., Ltd. announced on August 22 that it will jointly invest RMB 100 million with Tiande Investment, Long Haiming, and Xiehui Investment to establish Jiangsu Tiangong Titanium Crystal New Materials Co., Ltd. (referred to as "Tiangong Titanium Crystal"), with Tiangong Co., Ltd. holding 60% with RMB 60 million investment.
After using Tiangong Titanium Crystal as the operating platform to integrate shareholder resources, Tiangong Titanium Crystal will acquire Pinde New Materials' built plasma atomization production line and supporting assets, thereby achieving rapid expansion of titanium alloy 3D powder metallurgy production capacity.
According to relevant information, Pinde New Materials has mastered batch preparation processes for multiple alloy powders, with current capacity of 200 tons per year, expected to expand to 15 production lines by 2028, with total production of 3,000 tons/year. Its products mainly target three incremental markets: consumer electronics, aerospace, and medical.
After Tiangong Titanium Crystal's acquisition of Pinde New Materials, it can not only achieve upstream powder extension to form a "base material-powder-products" closed loop and improve product profitability, but also expand advantageous customer groups by pre-locking powder capacity and accelerate product domestic substitution, considering that currently over 70% of domestic 3D printing titanium alloy powder relies on imports.
Data shows that in 2024, the global 3D printing market size was USD 27.5 billion. Benefiting from declining core equipment and material costs and demand explosion in consumer electronics, aerospace, medical, automotive and other fields, the global market size is expected to reach USD 150.2 billion by 2032, with annual compound growth rate of 23%.
Tiangong Titanium Crystal's layout in 3D printing titanium alloy powder field through M&A + capacity expansion is to make adequate capacity preparations before industry volume expansion, laying a solid foundation for accelerated market share capture and consolidating leading position in the future.
In "bottleneck" material development, TIANGONG INT'L prepares high-nitrogen alloy materials through powder metallurgy technology. With excellent performance, these materials can be used in aerospace, robot planetary ball screw materials, medical devices, marine vessels and other fields. Data shows global demand for these materials is approximately 20,000-30,000 tons/year, with average selling price exceeding RMB 300,000/ton, representing a market scale exceeding RMB 10 billion annually.
TIANGONG INT'L's high-nitrogen steel has begun commercialization. Its self-developed high-nitrogen alloy TPMDC02A was delivered to Jiangsu Runfu Power in early July for planetary roller screw mass production, making TIANGONG INT'L the first domestic enterprise to achieve high-nitrogen steel screw applications.
Meanwhile, TIANGONG INT'L reached cooperation with Hengeda in July, with both parties jointly developing high-nitrogen steel applications in screw manufacturing, promoting precision and yield improvements in Hengeda's rolling functional components (such as planetary roller screws), thereby solving the pain points of domestic screws' "low processing efficiency and high cost."
Developing two high-nitrogen steel customers within one month demonstrates that TIANGONG INT'L's high-nitrogen steel products have gained industry recognition.
Additionally, TIANGONG INT'L also prepares nuclear fusion materials through powder metallurgy technology. Currently, TIANGONG INT'L has breakthrough in structural material advanced low-activation steel (RAFM steel) and functional material high-boron steel for nuclear power (304B7), with demand quantities of 4,000-7,000 tons/fusion reactor and 400-4,000 tons/fusion reactor respectively, representing considerable market demand.
The breakthrough of these "bottleneck" key materials not only has high commercial value but also holds important significance for national energy security and strategic industry development.
**Summary**
If fundamental recovery expectations in the second half are expected to drive company performance recovery, then TIANGONG INT'L's continued advancement in multi-dimensional commercialization in powder metallurgy will have more critical significance for the company's intrinsic value release. This means TIANGONG INT'L is accelerating its advancement toward high-end, advanced materials enterprise, with the company's valuation logic switching from specialty steel enterprise to high-end materials enterprise.
Whether in A-share or Hong Kong stock markets, enterprises with global high-end technology often enjoy higher valuation premiums, and TIANGONG INT'L's valuation center is expected to move upward.
This logic may already be getting verified in the secondary market. Behind TIANGONG INT'L's nearly 40% surge over the previous 7 trading days is actually large capital's advance positioning, as evidenced by trading volume indicators. Although August has not ended, TIANGONG INT'L's August trading volume has already reached the highest monthly level since listing, with very active trading.
After releasing this interim report, although TIANGONG INT'L's share price fell nearly 10% intraday, the closing decline narrowed to 3.42%, with the stock price still maintaining a strong position above the 3-day moving average.
Based on positive fundamental expectations and initial verification of valuation switching logic, TIANGONG INT'L may potentially develop a "Davis Double Play" market in the second half, which investors may focus on closely.
