Zhejiang Yongjin Metal Technology Co.Ltd(603995) (603995)
Key investment points
The production capacity of stainless steel cold rolling leader is further expanded. As the leader of stainless steel cold rolling in China, the company has continuously increased production capacity and consolidated the low position of the leader under the condition of steady operation in recent years. At present, the company’s production + construction bases include Zhejiang Yongjin, Jiangsu Yongjin, Fujian Yongjin, qingtuoshangke, Vietnam Yongjin and Thailand Yongjin. In addition, it also includes two industrial extension bases: praseodymium match composite board and Yinyang stainless steel water pipe. We predict that the production capacity of existing project companies will reach 2.1 million tons, 2.9 million tons and 3.6 million tons respectively from 2021 to 2023.
According to the latest announcement on foreign investment, the construction cycle of the two phases of foreign investment projects is 24 months and 18 months respectively. Therefore, it is judged that the company will maintain capacity growth after 2023.
High end products continued to grow
According to the future capacity planning of the company, the capacity of precision cold-rolled stainless steel from 2021 to 2023 is 185000 tons, 330000 tons and 400000 tons respectively. The profit margin of precision cold rolling is higher than that of wide width products. With this foreign investment, the company’s phase II project will add another 40000 tons of precision ultra-thin stainless steel production line, and the output of high-end products will continue to grow.
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 November 26, the corresponding PE is 22.09/15.91/12.40 times respectively. The company has high growth certainty and maintains the “buy” rating.
Risk warning: the construction and operation of new projects are less than expected, the downstream demand is less than expected, and the company’s business governance and other risks
