Zhejiang Yongjin Metal Technology Co.Ltd(603995) (603995)
On the evening of December 8, the company issued the prospectus for public issuance of convertible corporate bonds. The total amount of convertible bonds issued by the company this time is RMB 1 billion, and the number of convertible bonds issued is 1 million. It is used for the “annual processing of 195000 tons of ultra-thin precision stainless steel plate and belt project” and supplementary working capital. It is planned to invest 700 million yuan and 300 million yuan to raise funds.
Key investment points
The leading position of cold rolled stainless steel is more stable
The raised investment project will build 75000 tons of precision cold-rolled stainless steel strip and 120000 tons of wide cold-rolled stainless steel strip, The construction period is expected to be 18 months (July 2021 December 2022). After the completion of the project, precision cold-rolled stainless steel plate and wide cold-rolled stainless steel plate and strip will account for 38.72% (17% in 2020) and 14.46% (11.19% in 2020) of China’s estimated total market demand respectively. The low position of the company’s cold-rolled stainless steel leader will be more stable.
Raised investment projects help upgrade the company’s product structure
In recent years, thanks to the continuous development of downstream industries such as electronic information, environmental protection and energy, auto parts and so on, the demand for precision cold-rolled stainless steel sheet and strip in China has been increasing. Among them, the ultra-thin, ultra flat and ultra hard precision cold-rolled stainless steel sheet and strip with a thickness of less than 0.2mm can not meet the growing demand of high-end industries in China. At present, the company is one of the few manufacturers that can implement the products of this specification. After the project is put into operation, it will optimize the company’s product structure and improve the overall profitability.
In 2022, the company entered a period of rapid growth
Among the projects under construction and future planning projects of the company, Zhejiang, Jiangsu, Guangdong and Vietnam are expected to be put into operation successively from 2022 to 2023. In addition, the projects of Yongjin in Thailand and praseodymium race in Jiangsu are advancing in an orderly manner. According to the company’s current plan, after the completion of all projects, the company will achieve an annual production capacity of 348500 tons of precision cold-rolled stainless steel sheet and strip, 2.836 million tons of wide cold-rolled stainless steel sheet and strip, 100000 tons of stainless steel pipes and accessories, and 130000 tons of metal layered composites. The company’s market share will be further improved.
Profit forecast and valuation
As the leader of cold-rolled stainless steel, the company has a stable profit space. The continuous increase of production capacity will continue to help the company’s performance growth. It is estimated that from 2021 to 2023, the company’s operating revenue will be 258.63/350.92/455.22 yuan respectively, and the net profit attributable to the parent company will be 584/811/1.040 billion yuan, with a year-on-year growth rate of 40.93%, 38.80% and 28.32% respectively, and the corresponding EPS will be 2.51/3.48/4.46 yuan respectively. According to the closing price on December 8, the corresponding PE is 21.26/15.32/11.94 times respectively. The company has high growth certainty and maintains the “buy” rating.
Risk tips: the construction and operation of new projects are less than expected, the downstream demand is less than expected, and the company’s business governance.
