\u3000\u3000 China Tungsten And Hightech Materials Co.Ltd(000657) (000657)
Key investment points
Event: the company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company will be 470-560 million yuan in 2021, with a year-on-year increase of 112.6% - 153.3%; The net profit deducted from non parent company was 420-510 million yuan, with a year-on-year increase of 195.2% - 258.4%. The company's performance maintained rapid growth, slightly lower than expected.
The production and sales of main products increased rapidly, reducing costs and increasing efficiency, and improving the company's performance. In 2021, the company's performance has more than doubled in 2021. The main reasons are as follows: 1) driven by the strong downstream demand, while optimizing the product structure, the production and sales volume of the company's main products such as CNC cutting tools, it cutting tools and cemented carbide products have increased significantly, driving the steady growth of the company's revenue scale; 2) The company pays attention to cost reduction and efficiency increase, improves the production and operation efficiency of the company, and realizes high-quality development.
The company is the leader of CNC cutting tools in China and the global leader of PCB cutting tools, and has the advantages of cemented carbide industry. Zhuzhou Diamond, the holding subsidiary of the company, is a leader in China in terms of product types, quality and sales volume of NC cutting tools, of which the annual sales volume of NC blades exceeds 100 million in 2021; Jinzhou Seiko, a holding subsidiary, has focused on the field of PCB micro tools for 33 years, with excellent product performance, accounting for more than 20% of the global market in the field of PCB tools, ranking first in the world. Backed by Minmetals Group, the company is a leading enterprise in the whole cemented carbide industry chain. It has strong competitiveness in tungsten ore (trusteeship), powder, bar, cutting tools, hard surface materials and other links.
The reform of state-owned enterprises continued to deepen, with great potential for performance release. The company is one of the "two hundred demonstration enterprises of state-owned assets reform" of the SASAC. Through personnel reduction, improvement of income distribution system, gradual promotion of professional manager model at the subsidiary level, project follow-up investment by management team and technical team, excess profit sharing of new products, equity incentive and other measures, the company continues to release its vitality, The company's first equity incentive grant was registered in July 2021. Under the background of the company's revenue scale of 10 billion yuan, there is a huge profit release space.
Profit forecast and investment suggestions. We lowered the company's net profit attributable to the parent company from 2021 to 2023 to 528 million yuan, 718 million yuan and 930 million yuan respectively, and the compound growth rate of net profit attributable to the parent company in the next three years will be 61.4%. China Tungsten And Hightech Materials Co.Ltd(000657) is the leader of CNC cutting tools in China and has the advantages of cemented carbide industry chain. It is given 30 times PE in 2022 and the target price is 20.10 yuan, maintaining the "buy" rating.
Risk tip: manufacturing investment has fallen sharply; The company's capacity expansion is lower than expected; The competition pattern of the industry has deteriorated.
