\u3000\u3000 China Tungsten And Hightech Materials Co.Ltd(000657) (000657)
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, with a year-on-year increase of 112.56% to 153.27%. It is estimated that the impact of non recurring profits and losses on the net profit will be about 50 million yuan. Key points of the report:
The performance was in line with expectations, and Q4 maintained year-on-year growth
In the single quarter of 2021q4, the company expects to realize the net profit attributable to the parent company of 72-162 million yuan, with a year-on-year increase of 4.57% to 134.61%. Based on the calculation of 117 million yuan, the company has a year-on-year increase of 69.57% and a month on month decrease of 42.65%. According to the information disclosed by the company, the production and sales volume, gross profit and net profit attributable to the parent company of the company have increased year-on-year through measures such as optimizing product structure, reducing cost and increasing efficiency and improving service quality. Compared with Q3, Q4’s profit fell month on month, or partly due to Q3’s lower income tax, and Q3’s income tax expense decreased by about 20 million month on month compared with Q2.
The scale of cutting tool consumption market continues to expand, and the import substitution of high-end products of the company continues to promote
Under the influence of trade friction, epidemic situation and other factors, high-end customers represented by military industry and aerospace have strengthened their willingness to try domestic products in order to ensure the safety of the supply chain. We believe that we are in the golden period of domestic substitution of high-end cutting tools. The company’s CNC blade technology level is in the lead in China. It has been deployed in military industry, aerospace and other fields for many years, and has made continuous breakthroughs in high-end fields. In 2021, the company won the general contracting project of Chengfei cutting tools, and the new aerospace production line is expected to be put into operation in 2022. The company’s long-term plan is that the production capacity of CNC blades will reach about 200 million pieces at the end of the 14th Five Year Plan period. The subsequent company is expected to continuously optimize the product structure while expanding the production capacity, so as to create the growth of “both volume and price”.
The incentive mechanism is constantly improved, and the operation efficiency is expected to continue to improve
In addition to the improvement of profit margin brought by the optimization of product structure, the improvement of the company’s internal incentive mechanism is also expected to continuously improve the company’s profitability. In 2021, the company launched the equity incentive plan, promoted cost reduction through various measures, cleaned up the historical burden and took the battle lightly. The company also launched a number of market-oriented incentive measures, including professional manager mechanism and excess profit sharing of new product research and development. We believe that the profitability of the company is expected to continue to improve in the future.
Investment advice and profit forecast
Considering the growth space of the cutting tool industry and the fact that the company is the leader of CNC cutting tools integrated with China’s industrial chain, we expect that the net profit attributable to the parent company is expected to be 546 / 711 / 856 million yuan from 2021 to 2023, corresponding to the current pe26x / 20x / 17x, maintaining the “buy” rating.
Risk tips
The progress of domestic substitution is less than expected, the scale expansion of tool market is less than expected, and the capacity expansion is less than expected.
