\u3000\u3000 China Tungsten And Hightech Materials Co.Ltd(000657) (000657)
Key investment points
Event: the company issued an announcement, and the board of directors considered and approved two projects: expanding the production capacity of 10 million pieces of CNC blade production line of self hardening company and increasing the production line of high-strength fine tungsten wire with an annual output of 10 billion meters, which is mainly used in the photovoltaic industry.
The company is a leading enterprise of CNC cutting tools in China, accelerating the expansion of production and consolidating its leading position. Zhuzhou Diamond and self hardening company, two subsidiaries of the company that produce CNC cutting tools, will have a CNC blade production capacity of 100 million and 10 million respectively in 2021. In the field of CNC cutting tools, the company takes the lead in China in terms of production capacity and product quality. It is the pioneer and main force for domestic cutting tools to replace medium and high-end imported cutting tools in Japan, South Korea and Europe and the United States. In 2021, Zhuzhou drilling company will build two CNC tool production lines for aerospace and automotive industries respectively; This time, the self hardening company expanded the production capacity of 10 million NC blades again to meet the strong demand of downstream and consolidate the leading position of the company in China.
There is a strong demand for tungsten wire for photovoltaic. The company has the advantages of raw materials and technology, and actively expands production capacity. The company’s expanded capacity of 10 billion meter high strength fine tungsten wire is mainly used as diamond wire bus for photovoltaic silicon wafer cutting. At present, the diamond wire bus is mainly made of high-carbon steel wire. Compared with high-carbon steel wire, tungsten wire mainly has the following advantages: ① the wire diameter is thinner, which can cut thinner silicon wafer, which is in line with the development trend of thin film in photovoltaic industry, and the silicon material loss is lower, which is conducive to saving the cost of silicon material; ② Higher breaking force and faster theoretical cutting speed, which is conducive to improving the production efficiency of enterprises; ③ The durability of tungsten wire is stronger, and the loss of tungsten wire diamond wire is relatively less. The company is a leader in China’s tungsten industry chain. Its managed mines are leading in China’s production capacity, and has many years of tungsten wire production experience; The company has the raw materials and technical advantages of tungsten wire production. Actively expanding production capacity will contribute to the incremental performance of the company.
Profit forecast and investment suggestions. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 533 million yuan, 766 million yuan and 999 million yuan respectively, and the compound growth rate of net profit attributable to the parent company in the next three years will be 65.3%. China Tungsten And Hightech Materials Co.Ltd(000657) is the leader of CNC cutting tools in China and has the advantages of tungsten industry chain. It is given 30 times PE in 2022, with a target price of 21.30 yuan, maintaining the “buy” rating.
Risk tip: manufacturing investment has fallen sharply; The company’s capacity expansion is lower than expected; The competition pattern of the industry has deteriorated.
