\u3000\u3000 Weihai Guangwei Composites Co.Ltd(300699) (300699)
Event: Recently, the company released its 2021 annual performance express, which achieved a total operating revenue of 2.607 billion, yoy + 23.25%; Net profit attributable to parent company: 759 million, yoy + 18.31%. Among them, Q1 ~ Q3 achieved a total operating revenue of 1.963 billion in 2021; The net profit attributable to the parent company was 618 million. Q4 achieved a total operating revenue of 645 million in a single quarter, yoy-5.11%; The net profit attributable to the parent company was 141 million, yoy-23.47%. The price reduction of aviation batch products, the rise in the price and insufficient supply of raw materials for carbon beam business have had a certain impact on the company’s performance in 2021, but the company still achieved double-digit growth in revenue and parent company in the whole year, and the overall profitability has been steadily enhanced.
With lean management, all main businesses achieved positive year-on-year growth. 1) The revenue of carbon fiber and fabric was 1.275 billion, yoy + 18.32%. The two raised investment projects with M40J / m55j carbon fiber and t700s / t800s carbon fiber as products have gradually released production capacity and began to contribute performance since 2q21 was put into operation; T800h carbon fiber gradually increases with the promotion of validation projects and the delivery scale of validation production. The company’s multi-level and serial carbon fiber product strategy has alleviated the impact of price reduction of individual products. 2) The revenue of carbon beam is 808 million, yoy + 12.56%. The tight supply of carbon fiber, the main raw material, leads to insufficient order delivery of the company; The rising price of raw materials and the change of exchange rate also lead to the decline of product profitability. The company strengthened lean management and cost control, which alleviated the impact of the above adverse factors to a certain extent. 3) Prepreg revenue 359 million, yoy + 51.94%. The company’s prepreg business grew rapidly, mainly driven by the demand for high-end equipment and industrial applications.
The projects under construction are progressing smoothly; Profitability increased steadily. Total assets of yoy + 6.0 billion at the end of the period; Net assets: 4.147 billion, yoy + 14.05%; Cash flow from operating activities was 1.190 billion, yoy + 24.55%; The weighted average roe was 19.62%, yoy + 1.11ppt, and the overall profitability of the company was steadily enhanced. The two raised investment projects of the company have entered the normal production state, and it is expected to put into operation 4000 tons of the first phase of the large wire bundle project in 2022. The projects under construction are progressing smoothly, and the long-term growth potential of the company is expected.
The signing of large orders reflects strong demand, and the price reduction may have been implemented. On December 31, 2021, the company signed a large-scale contract with customer a, with a contract amount of 2.098 billion yuan, which is the highest in all previous contracts, which fully shows that customer a has established a high recognition of the company’s products through long-term cooperation; The performance period is 2.5 years (to the middle of 2024), which is the longest time span in previous contracts. This may reflect the implementation of price reduction. We judge that the price reduction of products involved in the contract is less likely in the next 2.5 years.
Investment suggestion: we expect the net profit attributable to the parent company from 2021 to 2023 to be 765 million yuan, 1059 million yuan and 1432 million yuan respectively. The current share price corresponds to 48x / 34x / 25X PE from 2021 to 2023. Combined with the company’s capacity expansion and the traction of application demand, 40 times PE will be given in 2022. The company’s EPS in 2022 is 2.04 yuan / share, corresponding to the target price of 81.75 yuan. We cover it for the first time and give it a “recommended” rating.
Risk warning: product delivery is not as expected; The price rise of raw materials exceeded expectations; The progress of new product R & D and market development was less than expected.
