\u3000\u3000 Jiangsu Toland Alloy Co.Ltd(300855) (300855)
Events
Recently, the company released the performance forecast for 2021, which is expected to deduct 149-170 million yuan of non net profit, with a year-on-year increase of 57.86-80.11%.
Brief comment
Casting superalloys enjoy a large demand for aviation development, and the proportion of high value-added precision castings has increased
Since 2017, the company’s Casting Superalloy revenue has increased rapidly, accounting for 45.45% in 2021h1. The company’s Casting Superalloy business is mainly military products, including casting superalloy parent alloy (gross profit margin of about 35%) and precision castings (gross profit margin of about 60%). The produced superalloy precision castings are mainly used for the key components of the hot end of aeroengines and gas turbines. Due to the continuous large-scale superposition of downstream aviation development demand and the promotion of aviation development’s industrial model of “small core and large cooperation”, the proportion of precision castings with high added value in the delivery of cast superalloys by the company has increased, and the revenue scale and profit level of cast superalloys have continued to increase.
The transformation of deformed superalloy from civilian to military can be expected, and the demand for special stainless steel is large
The proportion of the company’s deformed superalloy 2021h1 business decreased to 26.88%, of which the civil products business accounted for a large proportion. The company’s layout, development and import substitution in the field of aeroengine superalloy fastener rods and wires, is expected to continue to expand the scale of military products business. The proportion of special stainless steel business in 2021h1 is 10.41%, accounting for a large proportion in the aviation field. It is mainly used in various conduits of aeroengines, oil pipelines and hydraulic pipelines of aircraft fuselage. With the large amount of downstream aviation equipment, the performance continues to grow.
Capacity release + industrial extension is expected to drive the performance to a higher level
The company’s IPO raised and invested projects “construction project of ultra pure high-performance superalloy materials with an annual output of 1000 tons” and “construction project of complex thin-walled superalloy structural parts with an annual output of 3300 pieces” will be put into operation in July 2022 and the end of 2022 respectively, adding capacity of casting master alloy, deformed superalloy and precision casting gearbox, effectively ensuring delivery demand and supporting medium and long-term growth space. Shenyang Tunan precision parts manufacturing Co., Ltd., a subsidiary of the company, plans to invest in the construction of “automatic processing production line construction project of small and medium-sized parts for aviation”, form the processing and production capacity of 500000 precision parts per year, form a complete R & D and manufacturing business capacity of aviation parts, improve the company’s industrial layout, broaden the company’s product chain and realize synergy, Drive the company’s performance to a higher level.
Multiple lines of metal materials make efforts, based on national defense, military industry and high-end civil use
The company’s cast superalloys include cast superalloy parent alloys and precision castings. The products are mainly used in the aviation field. Cast superalloy master alloy is a kind of Superalloy forming parts by casting method. It has higher alloying degree, higher service temperature range and wider application field. It can be used to design and manufacture superalloy castings with near final shape or no allowance with complex structure and shape according to needs; Precision castings are the key components used in the hot end of aeroengines and gas turbines, including large complex thin-walled structural parts such as gearbox, turbine rotating and guide blades, integral blade disc, guide, diffuser and so on. The company has established long-term and stable cooperative relations with China’s major aero-engine manufacturer group A, group B and its subordinate enterprises, and has become its excellent supplier for many years; The deformed superalloy produced by the company can form bar, wire, strip, pipe and other profiles through cold and hot processing processes. The products are mainly used in aviation, nuclear power, gas turbine, petrochemical and other fields; The special stainless steel produced by the company is mainly bars and seamless pipes. Special stainless steel bars are mainly used in aviation, transportation, shipping, nuclear power and other fields; Special stainless steel seamless pipes are mainly used in the manufacture of various pipes, oil pipelines of aeroengines and hydraulic pipelines of aircraft fuselage.
The raised investment capacity is gradually released, and the performance is expected to maintain rapid growth under the high boom of the industry
The company’s IPO raised investment projects “construction project of ultra pure high-performance superalloy materials with an annual output of 1000 tons” and “construction project of complex thin-walled superalloy structural parts with an annual output of 3300 pieces” will be put into operation in July 2022 and the end of 2022 respectively. The raised investment projects mainly introduce advanced production management system by configuring high-performance smelting equipment and smelting pouring equipment, A new production line will be built in the existing production base of the company to develop and produce new products and models around the current core products of the company, deformed superalloy and cast superalloy. After the completion of the “construction project of super pure high-performance superalloy materials with an annual output of 1000 tons”, it will form a production capacity of 350 tons of Superalloy master alloy and 650 tons of superalloy bars, including aviation superalloy master alloy, aviation, nuclear power and gas turbine superalloy bars.
Profit forecast and investment suggestion: with explosive growth of precision castings, capacity expansion and delivery structure upgrading, Hangfa was given a buy rating
The company is a key high-tech enterprise in the national torch plan. The main supporting force for casting high-temperature alloy precision castings is in service and the focus is on developing aviation hairstyle number. The scale is concentrated and large-scale, and the business structure is upgraded. The military to civilian potential of deformed high-temperature alloy is expected. The special stainless steel starts rapidly with the downstream aviation equipment. The release of the company’s production capacity is expected to help the company’s performance to a higher level. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 177 million yuan, 233 million yuan and 281 million yuan respectively, with a year-on-year increase of 62.37%, 31.58% and 20.48% respectively. The corresponding EPS from 2021 to 2023 will be 0.89, 1.16 and 1.4 yuan respectively, corresponding to 61, 47 and 39 times of the current share price PE respectively, giving a “buy” rating
