Wedge Industrial Co.Ltd(000534) (000534)
The growth rate of revenue and net profit improved significantly. The company’s main business is the R & D, production and sales of probiotics, superalloys and their products. In 2020, the company achieved an operating revenue of 553 million yuan, an increase of 0.70% over the same period last year; The net profit attributable to the parent company was 77 million yuan, an increase of 8.56% over the same period last year. In the third quarter of 2021, the company realized an operating revenue of 469 million yuan, an increase of 26.11% over the same period last year; The net profit attributable to the parent company was 85 million yuan, an increase of 22.34% over the same period last year, and the performance increased significantly.
Equity replacement and parallel development of the two businesses. Wedge Industrial Co.Ltd(000534) includes two assets of Wanze superalloy and Wanze medicine under Wanze group. It was announced in 2019 that the company will replace the 100% equity of Changzhou Wanze Tianhai and 69% equity of Beijing Wanze bixuan with the 100% equity of Inner Mongolia Shuangqi jointly held by Wanze group and Wanze pharmaceutical investment. Inner Mongolia Shuangqi is the only manufacturer focusing on digestion and gynecology in China. It has obvious advantages in micro ecological research in the industry.
With advanced superalloy technology, the military products business has entered the harvest period. The company has mastered the advanced technology of high-temperature master alloy and blade manufacturing, established the core technology system of ultra-high-purity high-temperature alloy melting and the precision casting process system of turbine blade, and successfully prepared the samples of cast directional, single crystal and equiaxed blade and powder turbine disk, which has the technical basis of large-scale mass production and has great development potential. In the first half of 2021, the company’s superalloy business revenue was 21.56 million yuan, a year-on-year increase of 73%. Wanze Zhongnan Research Institute has carried out the R & D of a series of commercial engine blades, approved the project and delivered some products. The production and batch expansion of Shenshan Wanze precision casting superalloy master alloy smelting line has been successful, and the output of a single furnace has doubled. It has a mass production capacity of 150 tons of advanced Superalloys for aeroengines, and has carried out supporting construction focusing on 250kg pulverizing furnace and 25kg smelting furnace, forming a small batch production capacity of turbine disk. Batch production expansion helps to promote the rapid development of military business and promote the continuous improvement of performance.
Equity incentive shows the confidence of the company. In order to smoothly promote the company’s development strategy and improve the long-term incentive and restraint mechanism, the company issued a restricted equity incentive plan in November 2021. It plans to grant 5 million restricted shares to 155 incentive objects, accounting for 1.009% of the company’s total share capital of 495713100 shares at the time of announcement of the incentive plan, and the grant price is 7.70 yuan per share.
Investment advice
The company has mastered the advanced technology of high-temperature master alloy and blade manufacturing, and successfully prepared samples of cast directional, single crystal and equiaxed blades and powder turbine disks. The military products business has gradually entered the harvest period. Benefiting from the rapid growth of China’s demand for superalloys and the expansion of batch production of the company’s superalloy business, the company will usher in rapid performance growth. It is estimated that in 2021 / 2022 / 2023, the revenue will reach 630 / 718 / 826 million yuan, and the net profit attributable to the parent company will reach 111 / 132 / 156 million yuan, corresponding to pe71 / 60 / 50. The first coverage is given a “buy” rating.
Risk statement
Profitability risk, market risk of Superalloy business.
