Henan Hengxing Science & Technology Co.Ltd(002132) (002132)
event
Henan Hengxing Science & Technology Co.Ltd(002132) announcement: the company privately issued 145046295 shares to 16 specific objects, accounting for 10% of the total share capital of the company. The total share capital issuance price was 4.40 yuan / share, and the total raised capital was 638 million yuan. After deducting the issuance cost of 13 million yuan, the actual net raised was 625 million yuan, which is intended to be used for the reconstruction and expansion of prestressed steel strand Reconstruction and expansion project of 200000 t / a prestressed steel strand and alloy coated (zinc) steel wire and steel strand, etc.
Key investment points
Company profile: deeply plough into the field of metal products and advance the double main industry in the future
Founded in 1995, the company has been a professional manufacturer in the field of metal products for 20 years. Its products mainly include steel cord for radial tire, steel strand, rubber hose steel wire and ultra-fine diamond wire, belonging to the field of new materials in seven strategic new industries. In 2018, the company announced the construction of “120000 tons of high-performance silicone polymer per year” project, which has been in the safety supervision filing stage. After the filing is passed, it can be put into trial production. In the future, the company will form a double main industry development pattern focusing on metal products and new chemical materials. At present, the company’s revenue in the first three quarters of 2021 is 2.524 billion yuan (YoY + 20.83%), and the net profit attributable to the parent company is 91 million yuan (YoY + 7.12%).
Metal products industry: fund raising projects consolidate traditional business and continue to add weight to the new energy track
Metal products business has always been the company’s traditional core business, including galvanized steel wire and galvanized steel strand applied to power cables; Prestressed steel strand applied to infrastructure construction such as high-speed railway and expressway; Steel cord for radial tire applied to automobile field; Diamond wire for Cecep Solar Energy Co.Ltd(000591) silicon wafer cutting applied to photovoltaic field. From 2018 to 2020, the business revenue was RMB 2.8/32/2.8 billion respectively, accounting for 93% / 94% / 98%. In 2021h1, the revenue of metal products business is 1.577 billion yuan (YoY + 26.6%), accounting for 93%. It is expected that the revenue of main products will continue to grow steadily. The plan for the raised investment project was put forward in November 2020, which is mainly used for the reconstruction and expansion of prestressed steel strand, 200000 tons of prestressed steel strand and composite coating The reconstruction and expansion of (zinc) steel wire and strand will consolidate the company’s traditional business and is expected to bring a profit increment of 100 million yuan.
Vajra line will be the fastest growing product in the company’s metal products. The company is a full chain enterprise from wire rod to yellow wire to bus bar to diamond wire finished products. From the perspective of demand, with the advent of the era of superposition of dual carbon policy support and parity Internet access, photovoltaic installation is bound to usher in a high business cycle. According to statistics, the compound growth rate of monocrystalline silicon wafer capacity in the next three years will be as high as 66%. From the perspective of supply, the company’s diamond line has a stable monthly production capacity of more than 1 million km. In August and November 2021, the company announced to invest in the construction of 10 million km and 30 million km of ultra-fine diamond line respectively. The construction cycle is one year. With the existing capacity of 6 million km this year, the total capacity after production reaches 46 million km. It is expected that the shipment volume will exceed 7 million kilometers this year and is expected to reach 30 million kilometers next year. From the perspective of profitability, after the expansion of production this year, the gross profit margin of diamond line business increased rapidly, increased by 21pct in 2021h1 compared with 2020, and the profitability was significantly improved. With the use of the new line machine, it is expected to further optimize the gross profit margin in the future.
New chemical materials industry: silicone is expected to become another engine of growth next year
At present, the company’s Silicone project has also completed on-site acceptance. In the safety supervision filing stage, it can be put into trial production after passing the filing. It is expected that the output is expected to reach 80000 tons next year. The company mainly focuses on the following aspects in the silicone industry: 1. From the perspective of profitability, the raw materials of silicone are methanol and industrial silicon, with less power consumption and higher requirements for heat. The company’s project is located in Inner Mongolia, which will have advantages in product quality and price of methanol and coal price. 2. After more than ten years of development, the production equipment, process and technology of China’s silicone industry are more perfect, mature and stable. The company has the advantage of late development. 3. Inner Mongolia Eerduosi Resources Co.Ltd(600295) Dalat banner of Baotou city is the only place for Baotou Xi’an National Highway 210 and Baotou Shenzhou railway. It is close to Baotou Shenzhou railway and Baodong expressway, about 25 kilometers away from Baotou Airport. Products and raw materials can be transported directly by car and train, with convenient transportation conditions. Therefore, the chemical sector is expected to reach or exceed the metal products sector in a short time, becoming another engine for the company’s growth next year.
Profit forecast
It is predicted that the company’s revenue from 2021 to 2023 will be 3.2 billion yuan, 6.2 billion yuan and 8.5 billion yuan respectively, and EPS will be 0.11, 0.45 and 0.69 yuan respectively. The corresponding PE of the current stock price will be 54, 14 and 9 times respectively, giving the “recommended” investment rating.
Risk statement
The price of organic silicon is down, the progress of organic silicon project is less than expected, the photovoltaic installation is less than expected, and the progress of raised investment projects is less than expected.
