Wuxi Paike New Materials Technology Co.Ltd(605123) (605123)
Key investment points:
One of the leaders in the subdivided field of ring forgings, and a number of indicators are steadily improving. Since 2021, the company has developed rapidly, and its revenue and profit have increased rapidly. In the first three quarters of 2021, the company achieved a total revenue of RMB 1.191 billion, a year-on-year increase of 63.24%; The net profit attributable to the parent company was 192 million yuan, a year-on-year increase of 57.20%; The overall gross profit margin and net profit margin of the company remained basically stable. The gross profit margin of the company was 29.15%, with a year-on-year increase of 0.09pct and a month on month decrease of 0.14pct; The company’s net profit margin was 16.08%, a year-on-year decrease of 0.43pct and a month on month decrease of 0.12pct. The company’s inventory and contract liabilities have increased significantly, the company’s orders are full and worry free, and the annual performance is expected. At the end of 2021q3, the company’s contract liabilities were 45.5292 million yuan, a year-on-year increase of 327.49%, an increase of 28.4502 million yuan compared with the end of Q2; The inventory was 436 million yuan, a year-on-year increase of 71.88%, an increase of 102 million yuan compared with the end of Q2, and the inventory turnover rate was 2.35 times, a year-on-year decrease of 0.16 times.
Downstream aviation equipment volume growth, the company is expected to continue high growth. Under the background of the Centennial goal of building the army and the modernization of the national defense army in 2035, the national defense industry, especially the field of aviation equipment, has ushered in a stage of rapid development and large-scale development. As an important load-bearing component in aviation equipment, forged parts are the bottom support for improving the reliability and performance of aviation equipment. They are expected to benefit from the large-scale and technological upgrading of China’s aviation equipment and enter a period of accelerated development. The company has strong technical strength in the field of Military ring forgings. The company has mastered a number of core technologies such as the overall precision rolling technology of special-shaped section rings and the rolling technology of super large diameter rings. The products are mainly used in many types of aeroengines produced in China and under research. The company’s market share has steadily increased under the “double flow” pattern of military products, and the outsourcing proportion of main engine plants has gradually increased under the background of “small core and large cooperation”. The company is expected to fully benefit and maintain high performance in the field of military aviation. At the same time, the company added German forging press and other equipment this year, and signed long-term cooperation contracts with RORO and Ge. The company is also expected to usher in rapid growth in performance in the field of civil aviation in the future.
Profit forecast: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 255 million yuan, 366 million yuan and 506 million yuan respectively, and the EPS will be 236 million yuan, 339 million yuan and 468 yuan respectively, corresponding to the PE multiples of the current stock price of 60, 42 and 30 times. Considering that the company has strong technical strength in the field of aviation ring forgings, the market share is expected to gradually increase, and the downstream volume is rapid, the company is expected to benefit directly. The company is given a PE valuation of 46 ~ 52 times in 2022, and the corresponding price range is 155.94 ~ 176.28 yuan. For the first time, the company is given a “prudent recommendation” rating.
Risk warning: technology research and development is not as expected; Price rise of raw materials; Market demand is lower than expected.
