Weihai Guangwei Composites Co.Ltd(300699) (300699)
Domestic carbon fiber leader, driven by two wheels of military and civilian business, has achieved steady growth in performance in recent years. The company is the first listed company of carbon fiber in China. Its products cover carbon fiber and fabric, carbon beam, prepreg and composite products. Its products have the most complete types, the most advanced production technology and the most perfect industrial chain. It has presided over the drafting of two national standards: polyacrylonitrile based carbon fiber and carbon fiber prepreg. In 2020, the company achieved a revenue of RMB 2.116 billion and a net profit attributable to the parent company of RMB 642 million. In recent five years, the company’s revenue and net profit attributable to the parent company increased by 3.34 times and 3.23 times respectively, and the CAGR reached 35.22% and 34.02% respectively. The volume of revenue and profit achieved rapid growth.
Demand space: carbon fiber is the king of new materials and has broad prospects for both military and civil development. In terms of military aircraft, the consumption of composite materials of domestic advanced fighters has increased significantly. Advanced fighters represented by j-20, yun-20 and zhi-20 have entered or are about to enter the accelerated batch loading stage. We expect that the scale of China’s military aviation carbon fiber market will exceed 30 billion yuan in the next decade. In terms of civil aircraft, the development of domestic large aircraft is progressing smoothly, and the quality proportion of C919 composite materials will reach 12%. We expect that the scale of carbon fiber of Chinese commercial aircraft will be about 23 billion yuan in the next five years. In terms of wind power, the installed capacity of high-power fans has increased significantly. As an ideal material for the production and manufacture of large-size blades, the demand for carbon fiber is expected to be greatly released. We expect that the global wind power carbon fiber market will exceed 9 billion yuan in 2025. In terms of automobile and rail transit, driven by the policy of energy conservation and environmental protection, lightweight has become an important development trend, and the carbon fiber market for automobile and rail transit is expected to accelerate its development.
Competition pattern: the carbon fiber industry has high barriers, and the localization rate will continue to increase. Carbon fiber production is a typical technology and capital intensive industry, with many barriers such as R & D, process, equipment and scale. The global carbon fiber industry is highly concentrated, with the top five enterprises accounting for 47.29% of the total operating capacity. International giants have a significant first mover advantage. With the strong support of the policy, breakthrough progress has been made in the research and production technology of domestic carbon fibers. T300 and T700 Carbon fibers have met the needs of national defense. T1000 and t1100 high-strength medium modulus carbon fibers and m55j and m60j high-strength high modulus carbon fibers have been successfully developed. In 2020, the Chinese mainland’s carbon fiber production capacity reached 36 thousand and 200 tons, an increase of 35.58% over the same period last year, and the carbon fiber self-sufficiency rate has increased from 12.7% in 2009 to 37.87% in 2020.
Weihai Guangwei Composites Co.Ltd(300699) : the whole industrial chain develops in coordination, and Baotou project opens up the growth space of civil products. In the field of military products, the company is the largest supplier of military carbon fiber in China. T300 products have been supplied stably for more than ten years, T800 products have been expanded smoothly, and supporting has been realized on multiple military products models. With the large-scale batch production of relevant models of products, the military carbon fiber business is expected to achieve rapid growth. In the field of civil products, the company is the core supplier of carbon beam of wind power giant Vestas. The production capacity of phase I of Baotou project is about to be completed, and the unit electricity charge is expected to be only 8400 yuan / ton after it is completed. The tight supply situation of large tow is expected to be alleviated, and the carbon beam business will fully benefit from the release of wind power market demand. In addition, the company’s t700s and t800s civil products carbon fiber have been completed and put into operation. With the continuous promotion of production expansion and cost reduction, the civil products business is expected to fully benefit from the release of carbon fiber market demand such as automobile and rail transit. Composites: the company continues to expand its business and has become a system solution supplier for carbon fiber composite business. According to Sao carbon fiber data, in 2020, the global carbon fiber composite market scale was US $18.68 billion, 7.14 times the carbon fiber market scale. The company’s whole industrial chain developed cooperatively and has broad long-term growth space.
Profit forecast and Valuation: we slightly raised the net profit attributable to the parent company in 2021-23 to 795 million yuan, 1014 million yuan RMB 1.287 billion (original RMB 782 million, RMB 1005 million and RMB 1277 million), mainly considering the acceleration of China’s advanced fighter train loading, we slightly raised the sales assumption of carbon fiber and fabric military products in 2021. The adjusted profit forecast corresponds to EPS of RMB 1.53, RMB 1.96 and RMB 2.48 respectively, and PE of RMB 52.02x, 40.79x and 32.13x respectively. The leading position of the company is stable, the military and civilian businesses develop together, and the downstream demand continues to flourish Sheng, the performance is expected to continue to grow rapidly and maintain the “overweight” rating.
Risk warning: the progress of military aircraft train loading is less than expected; The development progress of domestic large aircraft did not meet expectations; Military carbon fiber price reduction risk; Production capacity construction is less than expected.
