\u3000\u3000 Western Superconducting Technologies Co.Ltd(688122) (688122)
Event overview: on January 27, the company issued an announcement on the pre increase of performance in 2021: it is expected to realize a net profit attributable to the parent company of 720 million yuan in 2021, a year-on-year increase of + 94.19%, and a net profit attributable to the parent company of 633 million yuan after deduction of non profits, a year-on-year increase of + 115.87%. According to the calculation, the net profit attributable to the parent company in 2021q4 was 182 million yuan, q3-18.93% month on month, 2020q4 + 84.09% year on year, 133 million yuan after deduction, q3-38.25% month on month, 2020q4 + 145.13% year on year.
Analysis and judgment:
The orders of main products are full, driving the high growth of performance in 2021. Volume: the orders received by the company throughout the year were relatively full, the production and sales of main products were further improved, and the capacity utilization rate of titanium alloy, the company’s main products, continued to be high. Price: the titanium industry maintains a high outlook, and the price focus of the industrial chain moves upward. The price of titanium materials in 2021 is + 15.67% year-on-year. The downstream of high-end titanium alloys, superconductors and superalloys has developed rapidly, and the company’s annual orders are relatively full, driving the high growth of performance in 2021.
The company has three major businesses: titanium alloy, superconductor and superalloy. The company is one of the main R & D and production bases of high-end titanium alloy rod, wire and forging stock in China, with titanium alloy revenue accounting for 88.63% in 2020; At present, the company is the only low-temperature superconducting wire rod manufacturer in China and the only whole process manufacturer of niobium titanium ingot rod, superconducting wire rod and superconducting magnet in the world; The company is also one of the key R & D and production enterprises of high-performance superalloy materials in China. Many of the company’s products are widely used in national military major equipment, large-scale scientific engineering and so on, with broad business prospects.
The progress of engine localization is accelerated, and the performance contribution of Superalloy may gradually appear. As one of the emerging suppliers of high-performance superalloy materials in China, the company has successively undertaken the research and development of several superalloy materials for China’s key national defense equipment. Several key types of aircraft engine superalloy materials have passed the long-term test of a certain type of engine, have met the supply qualification and have begun to supply, The company’s high-performance superalloy materials are still in the process of small batch production. Combined with the sales volume in the first half of 2021 and orders on hand, the annual sales volume in 2021 is expected to be about 600 tons, and the contribution of Superalloy business performance is expected to gradually appear.
In the future, the constant increase project will add superalloy + titanium alloy materials, which may fully benefit from the rapid development of downstream military industry and other fields. The company has recently completed the fixed increase, raising a total net fund of 1.981 billion yuan, of which 991 million yuan is planned to build the industrialization project of high-performance metal materials for aerospace, adding 5050 tons of titanium alloy materials and 1500 tons of superalloys. The company has a titanium alloy production capacity of 4950 tons. After the fixed increase project is put into operation in 2025, the titanium alloy production capacity will reach 10000 tons. In terms of superalloys, with the initial 2500 tons raised and invested by the company in 2019 put into operation in 2023 and the fixed 1500 tons raised and invested by the company put into operation in 2025, the company’s superalloy production capacity will reach 6000 tons. At that time, the superalloy production capacity will be in the first echelon in China and will fully benefit from the rapid development of downstream military industry and other fields in the future.
Investment suggestion: benefiting from the development of downstream fields such as aerospace and ocean engineering, the company has broad product demand space. With the production of high-end product projects, the company’s profitability is expected to continue to rise. We expect that the net profit attributable to the parent company from 2021 to 2023 will be RMB 722 / 958 / 1285 million in turn, corresponding to the closing price of RMB 74.78 on January 27, 2022, and the PE from 2021 to 2023 will be 48 / 36 / 27 times in turn. The company will be given a “recommended” rating for the first time.
Risk warning: downstream demand is less than expected; The price rise of raw materials exceeded expectations; The project is not progressing as expected.
