China Tungsten & Hightech (000657) — In-Depth Research Report
Global Leader in Tungsten Products; Drill Bit Business Benefits From AI Compute Infrastructure Build-Out
Key Data Snapshot
| Metric | Value |
|---|---|
| Ticker | 000657.SZ |
| Rating | Buy (initial) |
| Report date | February 12, 2026 |
| Closing price | RMB 55.33 |
| 52-week low / high | RMB 8.55 / 56.80 |
| P/B | 12.77x |
| Free-float A-share market cap | RMB 80.39 billion |
| Total market cap | RMB 126.08 billion |
| Book value per share (LF) | RMB 4.33 |
| Debt-to-assets (LF) | 48.62% |
| Total shares | 2,278.60 million |
| Free-float A-shares | 1,452.93 million |
Earnings Forecast & Valuation
| Metric | 2023A | 2024A | 2025E | 2026E | 2027E |
|---|---|---|---|---|---|
| Total revenue (RMB mn) | 13,675 | 14,743 | 17,860 | 21,079 | 23,146 |
| YoY (%) | 4.55 | 7.80 | 21.14 | 18.02 | 9.81 |
| Net profit to parent (RMB mn) | 799.75 | 939.45 | 1,341.71 | 1,899.07 | 2,347.02 |
| YoY (%) | 49.60 | 17.47 | 42.82 | 41.54 | 23.59 |
| EPS — fully diluted (RMB/share) | 0.35 | 0.41 | 0.59 | 0.83 | 1.03 |
| P/E (at current price, latest dilution) | 157.64 | 134.20 | 93.97 | 66.39 | 53.72 |
Investment Thesis
I. Integrated layout; asset injections drive high growth
1. Full-chain closed loop
- Sole core platform of China Minmetals for the tungsten industry
- Built an integrated loop: resource — smelting — deep processing — tool applications
- Strengthens platform value and growth optionality
2. Step-change from injections
- December 2024: consolidated Shizhuyuan Nonferrous (100%)
- 2025: cash acquisition of Yuanjing Tungsten (~100%)
- Injections materially improved the balance sheet
3. Profitability
- 9M2025 gross margin rose to 21.8%
- Net margin improved to 7.3%
4. Shareholder structure
- Actual controller: China Minmetals Corporation
- Minmetals holds 52.65% of the company via Minmetals Capital
- Minmetals aims to build the company into a platform-type tungsten chain player
II. Tungsten mining: global position & price upside
1. Strategic resource
- Non-renewable strategic metal
- China holds ~50% of global reserves and ~80% of capacity
- After Shizhuyuan and Yuanjing injections, the company controls quality ore capacity
- 2024 mining & concentration output 7,800 tonnes
2. Policy tightening & prices
- February 2025: export controls (25 tungsten product categories)
- April 2025: mining quota tightened YoY
- With rigid supply and steady demand, tungsten chain prices rose sharply
Price moves (from 2025):
- APT: RMB 210.5k/t → RMB 933.5k/t (+343%)
- Black tungsten concentrate: RMB 142.5k/t → RMB 630k/t (+342%)
- Tungsten powder: RMB 313.5/kg → RMB 1,600/kg (+410%)
3. Resource base
- 2024: #1 domestic tungsten concentrate capacity, ~20% of China total
- 2025: combined tungsten resource reserves 1.4793 million tonnes
- Annual tungsten concentrate capacity 26,940 standard tonnes
- Further injections pending: Xianglushan, Yaogangxian, Xintianling mines
III. Drill bits: AI compute lifts volume & price
1. Volume: AI server demand
- Server upgrades → thicker PCBs
- Drilling an 8 mm stack may require four drill bits of different lengths
- Interlayer materials upgrading to M9 (SiO₂ 99.99%)
- Hard/brittle materials sharply raise wear; life per bit falls from ~1,000 holes to 200–300
- Much higher replacement frequency
2. Price: higher aspect ratios
- Unit price rises exponentially with technical difficulty
- Example at 0.2 mm diameter:
- 9.5 mm length bit ≈ 10× the price of a 4.5 mm length bit
3. Technology
- Subsidiary Jinzhou Precision: equipment fully Swiss-imported
- 50× aspect-ratio bits in mass production
- 40×–50× high aspect-ratio bits: breakage rate < 0.01%
- Excellent hole-wall quality
4. Capacity expansion
- Three projects:
- Jul 29, 2025: 140 million pcs/year debottlenecking
- Dec 16, 2025: 130 million pcs/year debottlenecking
- Dec 16, 2025: 63 million pcs/year expansion
- Plan:
- End-2025 monthly capacity: 90 million pcs/month
- End-2026 potential: 110 million pcs/month
IV. AI server PCB demand context
Global server market:
- 2024–2029 server market CAGR 18.8%
- Accelerated server spend CAGR >20%
PCB market:
- 2024: +5.8% YoY; 2025E: +6.8%
- 2024–2029 CAGR 5.17%
High-end PCB:
- 18+ layer boards: 2025 output value +41.7% YoY
- HDI: 2025 +10.4% YoY
- 2024–2029 CAGRs 15.7% and 6.4%
PCB thickness vs. drill bits:
| Product | Board thickness | Drill length | Aspect ratio |
|---|---|---|---|
| GB200 | ≤4.5 mm | 6 mm | ≤30× |
| GB300 | 4.5–5.0 mm | 6.5 mm | 33× |
| Rubin | ≥6 mm | 7.5 mm | 40× |
| Orthogonal backplane | ≥8 mm | 9.5 mm | 50× |
Revenue mix forecast
| Segment | 2023A | 2024A | 2025E | 2026E | 2027E |
|---|---|---|---|---|---|
| Concentrate & powder | 35% | 35% | 35% | 35% | 35% |
| Alloy products | 23% | 23% | 23% | 23% | 23% |
| Inserts | 22% | 22% | 22% | 22% | 22% |
| Other | 20% | 20% | 20% | 20% | 20% |
Gross margin by segment
| Segment | 2021 | 2022 | 2023 | 2024 | 2025H1 |
|---|---|---|---|---|---|
| Concentrate & powder | 7% | 10% | 7% | 24% | 25% |
| Inserts & tools | 35% | 34% | 34% | 33% | 33% |
| Other cemented carbide | 25% | 24% | 10% | 9% | 9% |
Comparable valuation
| Company | Ticker | 2025E P/E | 2026E P/E | 2027E P/E |
|---|---|---|---|---|
| Xiamen Tungsten | 600549.SH | — | — | — |
| Zhangyuan Tungsten | 002378.SZ | — | — | — |
| China Tungsten & Hightech | 000657.SZ | 93.97 | 66.39 | 53.72 |
Risks
- Macro volatility
- PCB process adoption slower than expected
- AI server demand weaker than expected
Source: Soochow Securities Research
