Chinatungsten Hi-Tech (000657.SZ) In-Depth Analysis: Doubled Contract Liabilities and Assessment of Downstream Demand Sustainability

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Chinatungsten Hi-Tech is a leading hard alloy manufacturer in China, with its main business covering the R&D, production, and sales of hard alloy tools, mining tools, wear-resistant materials and other products. As a core upstream supplier in the industrial machine tool industry chain, the company benefits from the dual drivers of manufacturing recovery and domestic substitution [0].

Time Period	Gain Percentage
1 Month	+37.82%
3 Months	+129.78%
6 Months	+175.53%
1 Year	+293.49%
5 Years	+639.64%

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, this significant increase in the indicator reflects the following core logics:

Contract liabilities refer to an enterprise’s obligation to transfer goods to customers for which it has received or is entitled to receive consideration, representing

. The doubling of Chinatungsten Hi-Tech’s contract liabilities directly indicates:

• A significant increase in downstream customers’ willingness to purchase the company’s products
• Full order schedules, with customers proactively making advance payments to lock in production capacity
• Confirmation of the overall recovery trend in manufacturing demand

Based on the latest quarterly financial data [0]:

• Q3 FY2025 Revenue
  : USD 491 million, up 10.1% QoQ
• Q2 FY2025 Revenue
  : USD 446 million, up 31.6% QoQ
• Q1 FY2025 Revenue
  : USD 339 million

The continuous revenue growth and doubled contract liabilities form a good confirmation of

.

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Chinatungsten Hi-Tech’s downstream demand shows a

, with the main drivers including:

Downstream Industry	Demand Growth Rate	Core Driver Logic
New Energy Vehicles	85%	Integrated die casting and precision forging drive demand for high-end tools
Industrial Machine Tools	72%	Policy support + accelerated domestic substitution, explosive demand for five-axis machine tools
Aerospace	65%	Mass production of domestic large aircraft C919, satellite manufacturing industry chain
3C Electronics	58%	Iterative upgrade of consumer electronics; Chuangshiji’s drilling and tapping machines hold over 60% of the global market share
Construction Machinery	45%	Accelerated infrastructure investment, equipment renewal cycle

According to the latest industry research report [1], the industrial machine tool industry has received strong policy support:

• Four government departments have introduced preferential policies for R&D expense additional deduction (qualified enterprises can enjoy 100% additional deduction)
• The Ministry of Industry and Information Technology (MIIT) plans to establish a high-quality standard system by 2026
• The localization rate of high-end five-axis machine tools has increased to over 15%

As a leading hard alloy tool manufacturer, Chinatungsten Hi-Tech directly benefits from the growth of machine tool sales and the domestic substitution process, as

[1].

According to data from an international market research institution [2]:

• The global hard alloy tool market size is expected to grow from approximately USD 10 billion in 2025 to over USD 14 billion in 2034
• The compound annual growth rate (CAGR) is approximately 4.9%
• As the world’s largest manufacturing country, China’s market growth rate is higher than the global average

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Based on the latest financial data [0], Chinatungsten Hi-Tech’s overall financial condition is robust:

Financial Indicator	Value	Assessment
ROE	17.29%	Excellent - Strong shareholder return capability
Net Profit Margin	9.14%	Good
Operating Profit Margin	11.27%	Healthy
Current Ratio	1.67	Robust - Sufficient short-term solvency
Quick Ratio	1.16	Good
Debt Risk Classification	Low Risk	Prudent financial policies

: The latest quarterly free cash flow (FCF) reached USD 243 million, indicating the company’s strong cash generation capability.

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Indicator	Value	Industry Comparison
P/E (TTM)	54.12x	Relatively High
P/B (TTM)	8.66x	High
P/S (TTM)	4.95x	Reasonable

The current valuation is in a historically high range, reflecting the market’s optimistic expectations for the company’s future high growth.

Based on technical analysis [0]:

• Trend Judgment
  : In an uptrend (breakout to be confirmed)
• MACD
  : Bullish Signal
• KDJ
  : Overbought Zone (K:86.1, D:81.0)
• RSI
  : Overbought Risk
• Key Resistance Level
  : $39.27
• Key Support Level
  : $32.92

1. Valuation Pullback Risk
   : With the current P/E ratio reaching 54x, if performance growth falls short of expectations, the company may face valuation compression
2. Raw Material Price Fluctuation
   : Fluctuations in the prices of upstream raw materials such as tungsten may affect gross profit margin
3. Downstream Cyclical Fluctuations
   : Downstream sectors such as new energy vehicles and 3C electronics are cyclical
4. Market Competition
   : The high-end tool market still faces competition from international brands

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1. Accelerated Domestic Substitution Process
   : There is huge room for domestic substitution of high-end hard alloy tools, and domestic enterprises continue to make technological breakthroughs
2. Confirmation of Manufacturing Recovery Trend
   : The doubling of contract liabilities and continuous revenue growth verify the authenticity of demand recovery
3. Increased Policy Support
   : Made in China 2025 continues to advance, with industrial machine tools and CNC tools as key supported sectors
4. Expansion of Emerging Application Scenarios
   : Demand increments in new fields such as new energy vehicles, humanoid robots, and aerospace are considerable

1. Macroeconomic Uncertainty
   : Fluctuations in the manufacturing PMI may affect tool demand
2. Industry Capacity Expansion
   : Increased capacity in the hard alloy industry may intensify competition
3. Technological Iteration Risk
   : New materials and new processes may replace traditional hard alloys

Dimension	Assessment
Short-Term	The stock price has risen sharply, and technical indicators show overbought conditions; it is recommended to wait for a pullback before positioning
Medium-Term	The doubled contract liabilities verify order prosperity, with high certainty of performance growth
Long-Term	Driven by dual engines of domestic substitution and manufacturing upgrading, the company has good growth potential

: Considering the current valuation level, it is recommended that investors adopt a strategy, positioning on dips near the support level ($32.92) and holding for the medium to long term to share the dividends of manufacturing upgrading.

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Chinatungsten Hi-Tech’s contract liabilities doubling to RMB 370 million is a

. Combined with the financial data of continuous revenue growth and full orders, the manufacturing recovery trend is verified. From the perspective of demand drivers, the rapid growth of downstream industries such as new energy vehicles, industrial machine tools, and aerospace provides solid demand support for the company.

Although the current valuation is high and technical indicators show overbought signs, from the perspective of the

, Chinatungsten Hi-Tech still has good investment value. It is recommended that investors pay attention to positioning opportunities near the and hold for the medium to long term.

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[0] Gilin API Financial Data - Chinatungsten Hi-Tech (000657.SZ) Company Overview, Financial Analysis and Technical Analysis Data

[1] NetEase Finance - “Investment Logic and Core Targets of Industrial Machine Tool Concept Stocks” (https://www.163.com/dy/article/KIN831FT0521JM9H.html)

[2] Global Market Insights - “Solid Carbide Tools Market Report 2025-2034” (https://www.gminsights.com/)