Jiangsu Shentong Valve Co.Ltd(002438) (002438)
Investment logic
Special valve leaders have fully benefited from the restart of nuclear power: the company has been deeply engaged in the field of valves for more than 20 years. It is a leading enterprise of nuclear butterfly valves and ball valves, and continues to expand new products. During the “14th five year plan” period, it is estimated that there are 6 newly approved units in China every year: 1) space for nuclear grade ball valves and butterfly valves: supporting new units, according to the value of single station * proportion of equipment * proportion of valves * proportion of butterfly valves and ball valves, the annual market space is 599 million yuan; The maintenance and replacement of existing units are converted according to the installed capacity and the maintenance proportion of butterfly valve and ball valve, and the annual market space is 233 million yuan; The total is 832 million yuan / year. 2) Valve + spent fuel Revenue Forecast: according to the estimated valve market space, it is estimated that the company’s new orders for nuclear valves will be RMB 500-700 million per year, and the latest raised investment project is planned to invest RMB 150 million in the construction of spent fuel phase II project. The order execution cycle of nuclear power valves is 2-3 years, and the delivery period of spent fuel reprocessing equipment is generally 2 years. It is predicted that the company’s revenue in the field of nuclear power valves and spent fuel in 21-23 will be RMB 714 / 897 / 1195 million. With the gradual decline of steel prices, the gross profit margin in 21-23 is expected to be 41.4% / 42.9% / 42.9%.
Following the “double carbon” strategy, the company benefited from multiple business segments. 1) Metallurgical Sector: in the field of metallurgy, the company disclosed that the market share of special valves reached 70%, cm, benefiting from the transformation of iron and steel enterprises and equipment replacement in the process of “carbon peak”. The company’s “valve housekeeper” industrial Internet platform cut into the field of general valves and further opened up the growth space. In the first half of the year, the metallurgical orders increased by 22% year-on-year. We expect the revenue of the metallurgical sector to be RMB 565 / 706 / 847 million from 21 to 23, and the gross profit margin to be stable at 31%. 2) Energy saving services: the company acquired Ruifan energy saving and cut into the field of energy saving services. Contract energy management services of the company (EMC) is mainly used for energy conservation and emission reduction in iron and steel enterprises. In the past two years, energy-saving services have accumulated orders of 2.6 billion yuan, and the revenue is expected to be 190 / 2.5 / 400 million yuan in 21-23 years. 3) energy Petrochemical: the company’s orders in the field of energy Petrochemical come from the energy equipment division and its subsidiary Wuxi flange, and the revenue increment lags behind the order increment by about one year. The growth rate of new orders in 2020 is 17%, which is expected to bring revenue of 5.08/5.94 in 21-23 years /772 million yuan, with a relatively stable gross profit margin.
Investment advice and valuation
Nuclear grade valves, spent fuel reprocessing, metallurgy, energy-saving services and other sectors will bring deterministic performance increments. It is estimated that the company’s revenue in 21-23 will be RMB 2.107, 2.627 and 3.344 billion, and the net profit attributable to the parent company will be RMB 308, 407 and 518 million. EPS is 0.64, 0.84 and 1.07 yuan respectively, and the corresponding PE is 26 times, 20 times and 16 times respectively. Referring to comparable companies, the company is given 33 times PE in 2022, with a corresponding market price of 10.2 billion yuan and a target price of 20.91 yuan. It is given a “buy” rating for the first time.
Risk statement
The risk that the progress of nuclear power construction is less than expected; The risk that the transformation progress of iron and steel enterprises is less than expected; Price fluctuation risk of raw materials; Shareholder pledge accounts for a relatively high risk.
