\u3000\u3000 Wuxi Paike New Materials Technology Co.Ltd(605123) (605123)
Event: Wuxi Paike New Materials Technology Co.Ltd(605123) released the performance express of 2021, realizing an operating revenue of 1.733 billion yuan, a year-on-year increase of + 65.7%; The net profit attributable to the parent company was 304 million yuan, a year-on-year increase of + 82.6%; Deducting the net profit not attributable to the parent company of RMB 286 million, a year-on-year increase of + 91.1%. Benefiting from the prosperity of downstream aviation, aerospace and new energy industries, the company has sufficient market orders, effectively improved production capacity and rapidly expanded its business scale; The company will promote the rapid development of its main business through continuous management upgrading and business integration.
Rapid and large-scale aerospace business: the company is a core supplier of ring forgings in China’s aerospace high-end field. Since 2013, it has become a supporting enterprise for many types of high-end products such as aeroengines, launch vehicles, missiles and gas turbines. In recent years, the company’s revenue in the aerospace field has maintained a high growth rate. In the first half of 2021, the revenue of Aerospace Forgings reached nearly 300 million yuan, a year-on-year increase of + 121%, accounting for 39% of the total revenue from 16% in 2017. The gross profit margin of Aerospace Forgings of the company is significantly higher than that of civil products. In the first half of 2021, the gross profit margin of Aerospace Forgings reached 44.3%, resulting in a significant increase in performance.
Signed long-term agreements with GE and Luoluo to lay out the field of clean energy and open up market space for civil products business: in the field of civil aviation, the company signed 11-year and 5-year long-term agreements with Luoluo and Ge aviation respectively in the first half of 2021, covering a variety of best-selling models. The production of titanium alloy fan casing will be transferred to the Chinese market for the first time, which is expected to seize the opportunity of China’s aviation demand growth and make a breakthrough in the development of superalloy and titanium alloy products. Focus on the development of photovoltaic, hydropower and other clean energy fields, break through technical barriers and seize market share. The market space of the company’s civil products business is expected to be further opened to consolidate the foundation of performance growth.
Continuous R & D investment and leading technical advantages: the company invested 55.4 million yuan in R & D expenses in the first three quarters, a year-on-year increase of + 88%, accounting for 4.7% of the total revenue. The company has mastered many core technologies, such as overall precision rolling technology of special-shaped section ring, special ring rolling technology, super diameter ring rolling technology and so on. At the same time, focusing on the needs of major equipment such as missiles, launch vehicles and aerospace vehicles, we have developed a new generation of light alloy materials, especially aluminum lithium alloy and magnesium alloy forgings, and made a breakthrough, which is expected to further expand the aerospace market.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 304 / 422 / 561 million respectively, and the corresponding PE of the current stock price is 45 / 33 / 25 times. The company is the core supplier of ring forgings in the high-end field of China’s aerospace industry, with stable business performance and steady increase in profit margin. With sufficient orders and guaranteed production capacity, it is covered for the first time and rated as “overweight”.
Risk warning: the risk that the downstream demand is less than expected; Risk of price fluctuation of raw materials; The risk of new product R & D and market expansion falling short of expectations.
