China Tungsten And Hightech Materials Co.Ltd(000657) (000657)
Key points of the report:
Industrial chain integration, cutting tool leader, CNC blade + micro drill double wheel drive growth
The company is the tungsten industry management and control platform of Minmetals Group. Minmetals Group continues to inject tungsten industry related assets into the company, which is expected to create the industrial chain integration advantage of the combination of "raw materials" and "deep processing":
Raw materials: Minmetals Group has made a commitment to industrial chain integration. At present, the company is hosting the core tungsten mines and smelting enterprises under Minmetals Group, waiting for the performance of mining enterprises to recover and inject after meeting the conditions. The tungsten resource reserves within the management scope of the company account for 13% of the total reserves in China, the annual production capacity of tungsten smelting accounts for 10% of the national ammonium paratungstate (APT) capacity, and the raw material support capacity is strong.
Zhuzhou Diamond: the leader of CNC blade in China, with high-end trend. Zhuzhou Diamond's CNC blade production capacity is expected to reach about 100 million pieces in 2021, and is expected to reach about 200 million pieces by the end of the 14th five year plan. At the same time, the product structure is expected to continue to be optimized, and the development of high-end fields is irresistible. The localization rate of tool varieties of typical demonstration lines of aviation enterprises has reached more than 70%. In 2021, it won the bid for the general contracting project of flying tools. At the same time, the new aerospace production line is expected to be put into operation in 2022, which is expected to improve its revenue and profitability at the same time. It is estimated that Zhuzhou Diamond will realize a net profit of RMB 242 / 312 / 395 million respectively from 2021 to 2023, with a year-on-year increase of 64.63% / 28.73% / 26.75%.
Jinzhou Seiko: the leader of PCB tools, with a leading market share in the world. Jinzhou Seiko's products are mainly micro drills and milling cutters used in PCB processing. In 2020, the output of micro drills will be 510 million, accounting for 30% in China and 18% in the world. It is the only drafting unit of the national standard for PCB drilling / milling tools. The 0.01mm diameter micro drill and milling cutter have been successfully developed, and the technical level is in the leading position in the world. They have entered the dental needle series and further enriched the product line. At the same time, with the expansion of production of hard bar, it is expected to realize self supply of bar in the future, and the profitability will also be improved. It is estimated that Jinzhou Seiko will realize a net profit of 245 / 287 / 330 million yuan from 2021 to 2023, with a year-on-year increase of 53.19% / 16.95% / 15.12%.
The scale of cutting tool consumption market is expected to continue to expand, and there is broad space for import substitution of high-end cutting tools
In 2019, the total consumption of China's cutting tool market was about 39.3 billion yuan, and CAGR was 7.7 billion yuan from 2005 to 2019 80%。 Considering that China's cutting tool consumption accounts for a low proportion of CNC machine tool consumption, and there is still a certain gap with developed countries, it is assumed that China's cutting tool consumption will reach 37% in 2030, and China's machine tool consumption will increase by 1.5% CAGR. According to our estimation, the scale of China's cutting tool consumption market is expected to reach 63.1 billion yuan in 2030 and maintain a 5% CAGR growth from 2020 to 2030. According to the association, according to the peak year (2018) according to the estimated data, the high-end market of China's cutting tools is conservatively estimated at 22.2 billion yuan, of which about 2 / 3 depends on imports, and the import substitution space is about 15 billion yuan. Under the dual influence of trade friction and epidemic situation, high-end customers represented by military industry and aerospace are more willing to try domestic products to ensure the safety of supply chain. We believe that China is now in the process of making high-end cutting tools domestic Replace the golden age.
The reform of central enterprises is light, the profitability is expected to be gradually improved, the equity incentive plan is promoted, and the certainty of performance growth is enhanced
The reform of the company's central enterprises continued to advance, and the "three supplies and one industry" project completed the separation and handover. In 2020, the number of employees decreased by 2583 compared with 2016, and the operation efficiency was significantly improved. The sales / management / financial expense ratio in 2021q3 decreased by 2.84/2.36/0.5pcts respectively compared with 2016, increasing the profit space. At the same time, the company launched the equity incentive plan. The first phase involves 25 million shares, accounting for 2.33% of the total share capital at the time of the company's announcement. The number of the first batch of grants is 143. It goes deep into the middle-level cadres and core professionals of the company, which is expected to fully mobilize the enthusiasm of employees and enhance the certainty of performance growth.
Investment advice and profit forecast
Considering the growth space of the cutting tool industry and the fact that the company is the leader of CNC cutting tools integrated with China's industrial chain, we expect that the net profit attributable to the parent company from 2021 to 2023 is expected to be 546 / 711 / 856 million yuan respectively, corresponding to the current pe33x / 26x / 21x, maintaining the "buy" rating.
Risk statement
The progress of domestic substitution is less than expected, the scale expansion of tool market is less than expected, and the capacity expansion is less than expected.
