\u3000\u3000 Xi’An Triangle Defense Co.Ltd(300775) (300775)
Event: the company recently issued two important announcements: 1) it issued a fixed increase plan, which plans to raise no more than 3.13 billion yuan for five production expansion and construction projects such as the deepening and upgrading project of aviation precision die forging industry, and replenish working capital. 2) The draft stock incentive plan was issued. It is proposed to grant no more than 5 million restricted shares to 45 incentive objects, accounting for 1.01% of the total share capital of the company, and the grant price is 22.01 yuan / share. Our comprehensive comments are as follows:
We will actively expand production with fixed growth and extend the business line vertically and horizontally. This is the third financing of the company in three years, and it plans to raise 3.13 billion yuan (290 million yuan was raised through IPO in May 2019 for the first time, and 900 million yuan was raised through issuing convertible bonds in May 2021 for the second time). The goal is to build a comprehensive business platform of “forging – parts processing – component equipment” between raw materials and main engine plants, and the business line is continuously expanded horizontally and vertically. The fixed increase of investment is as follows: 1) the deepening and upgrading project of Aviation Precision Die Forging Industry: the construction of small and medium-sized forging production line, with an investment of 330 million yuan and a construction period of 36 months, and the annual revenue is expected to be 280 million yuan after it is completed. 2) Aviation power blade precision forging project: build an aeroengine blade production line, with an investment of 530 million yuan and a construction period of 36 months. It is expected to achieve an annual revenue of 360 million yuan after it is completed. 3) Aviation Digital Integration Center Project: it aims to extend the forging industry chain to the downstream component assembly and meet the outsourcing and supporting needs of the component assembly of the main engine factory. With an investment of 710 million yuan and a construction period of 36 months, it is expected to achieve an annual revenue of 300 million yuan after the project is completed. 4) Aerospace rocket body structure intelligent manufacturing project: focus on building rocket body structure intelligent manufacturing production line to form the supporting capacity of rocket body structure parts in the aerospace field. With an investment of 840 million yuan and a construction period of 48 months, it is expected to achieve an annual revenue of 450 million yuan. 5) Intelligent interconnected manufacturing base project of advanced aviation parts: extend the forging industry chain, expand the precision processing business of aviation parts, and carry out advanced processing business in the aviation field. With an investment of 1.28 billion yuan and a construction period of 36 months, it is expected to achieve an annual revenue of 470 million yuan. 6) It is proposed to use 600 million yuan to supplement working capital, meet the needs of working capital and improve the efficiency of resource allocation.
Equity incentive shows the company’s confidence in development. The incentive plan plans to grant no more than 5 million restricted shares, accounting for 1.01% (the total share capital on February 24, 2022 is 496 million shares), the grant price is 22.01 yuan / share, and there are 45 incentive objects in total. The assessment period is from 2022 to 2024, and the assessment index is that the net profit attributable to the parent company from 2022 to 2024 is 600 million, 780 million and 1.01 billion respectively (the increase in 2020 is taken as the assessment index in the announcement, which is converted into the same period as the previous year). The amortization of equity incentive expenses totals 87.96 million yuan, compared with 41.23 million, 31.88 million, 12.64 million and 2.2 million respectively from 2022 to 2025.
Investment suggestion: we believe that the company has deeply cultivated the field of high-end aviation forging and formed strong barriers in terms of technology accumulation and customer stickiness. The company continuously extends its business field and opens up long-term growth space through fixed increase and expansion of production. We expect the net profit attributable to the parent company from 2021 to 2023 to be 432 million yuan, 660 million yuan and 941 million yuan respectively. The current share price corresponds to 54x / 35x / 25X PE from 2021 to 2023. Taking into account the continuous high outlook of the downstream industry and the leading position of the company, we give the company 40 times PE in 2022. The company’s EPS in 2022 is 1.33 yuan / share, corresponding to the target price of 53.30 yuan. We cover it for the first time and give it a “recommended” rating.
Risk tips: the construction of raised investment projects is not as expected, the supply of raw materials is insufficient, price fluctuations, etc
