\u3000\u3 Guocheng Mining Co.Ltd(000688) 122 Western Superconducting Technologies Co.Ltd(688122) )
Event: Western Superconducting Technologies Co.Ltd(688122) released the performance express of 2021, realizing an operating revenue of 2.935 billion yuan, a year-on-year increase of + 38.9%; The net profit attributable to the parent company was 743 million yuan, a year-on-year increase of + 100.4%; Deduct the net profit not attributable to the parent company of 655 million yuan, a year-on-year increase of + 123.3%. Seizing the market opportunities, the company has full orders and high overall utilization rate of production capacity throughout the year. The sales revenue of main products such as high-end titanium alloy materials, superconducting products and high-temperature alloy materials has increased rapidly, with remarkable economies of scale.
High end titanium alloy + superconducting materials, consolidate the foundation of performance: the company is one of the main R & D and production bases of high-end titanium alloy rod, wire and forging stock in China. It is the only low-temperature superconducting wire manufacturer in China. Its products make up the "short board" of key materials required for the manufacture of new fighters, large aircraft, helicopters, aeroengines and ships in China. In the first half of 2021, the revenue of high-end titanium alloy materials was 1.035 billion yuan, a year-on-year increase of + 26.2%; Superconducting products achieved a revenue of 105 million yuan, a year-on-year increase of + 15.6%. The two traditional advantageous businesses grew steadily and consolidated the company's performance foundation.
Emerging suppliers of superalloys, with rapid growth in large quantities: the company is one of the emerging suppliers of high-performance superalloy materials in China, undertaking the research and development of several superalloy materials for key national defense equipment in China. The tests of superalloy powder disk parts, large-size superalloy bars and superalloy materials of key models of aircraft engines are progressing smoothly or qualified for supply, and the typical products have been delivered in small quantities to many models. In the first half of 2021, the revenue of superalloy materials was 51.65 million yuan, a year-on-year increase of + 515.2%. After the completion of the project, it is expected to add 5050 tons of titanium alloy capacity, 1500 tons of Superalloy capacity and 2000 tons of superconducting wire for MRI, breaking through the existing capacity bottleneck, and the superalloy business is expected to increase rapidly.
Significant economies of scale and continuous improvement of profit margin: from 2017 to 2020, the company's revenue increased from 970 million yuan to 2.11 billion yuan, and CAGR reached 29.8%; The net profit attributable to the parent company increased from 140 million yuan to 370 million yuan, with a CAGR of 37.7%. In 2021, the company continued to maintain rapid growth. With the expansion of the company's sales volume and the improvement of capacity utilization, the company's profit margin under the scale effect continued to improve. The gross profit margin of sales in the first three quarters of 2021 was 43.3%, an increase of 6.8 percentage points year-on-year; The net profit margin on sales was 25.8%, an increase of 8.1 percentage points year-on-year.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 743 / 996 / 1289 million respectively, and the corresponding PE of the current stock price is 52 / 39 / 30 times. The company is a leading supplier of high-end titanium alloy materials for aviation in China. In recent years, it has made great efforts in the high-temperature alloy business and batch supply, which can be expected to grow. The company's core technology is leading, with rapid growth of revenue and continuous improvement of profit margin. It is covered for the first time and is rated as "overweight".
Risk warning: the risk that the downstream demand growth is less than expected; Risk of price fluctuation of raw materials; The risk that the capacity increase is less than expected.
