Jiangyin Hengrun Heavy Industries Co.Ltd(603985) (603985)
Key investment points
Recommended logic: 1) the trend of large-scale fan drives the improvement of tower flange diameter and process requirements. Enterprises that can produce forged flanges suitable for large fans and sea breeze fans have prominent competitive advantages, and the industry concentration is expected to increase. It is expected that the company’s share in the sea breeze flange market will increase to about 60% in the future. 2) The localization of fan bearings is accelerated. In 2019, the market share of domestic bearings is about 10%. There is great potential for improvement in the future, and Chinese enterprises usher in a golden development period. 3) The company is the global leader of wind power tower flange, and the downstream customers are of high quality. The company has focused on the manufacturing of wind tower flange for more than ten years, and has accumulated many high-quality customer resources such as Vestas and Xinjiang Goldwind Science And Technology Co.Ltd(002202) . The 9mw fan flange has mass production capacity. At the same time, the company actively develops the business of bearing and gearbox, establishes and improves the bearing industry chain, and its comprehensive strength will reach a new level.
During the “14th five year plan” period, sea breeze entered a high growth period, the trend of large-scale fan is clear, and the competitive advantage of the company’s large-scale wind tower flange is prominent. Since 2021, provinces and cities have successively issued clean energy development plans during the 14th Five Year Plan period. From the content of wind power planning, coastal provinces and cities pay special attention to sea wind projects. We expect that land wind and sea wind will go hand in hand during the 14th Five Year Plan period, the annual installed capacity of wind power is expected to exceed 50gw, and sea wind is expected to enter a high-speed growth period. The sea air fan is larger than the land air fan, and the land air fan also has a large-scale trend, so the required tower diameter is larger and the corresponding flange diameter is larger. At present, the company has mass produced the flange diameter of air duct more than 7.5m, and has mass produced the flange of 9mw sea air tower. Under the trend of large-scale fan, the company’s flange production advantage is further enlarged.
The localization process of fan bearings is accelerated, and Chinese manufacturers welcome the development opportunity. Fan bearing is the core precision part of generator set, with more complex production process and higher comprehensive requirements. The market has been dominated by Germany, Japan, the United States and Sweden for a long time, and it is a relatively low production link of fan parts in China. In recent years, with the high demand for wind power downstream and the catalysis of limited imported bearings under the epidemic, the localization process of bearings has accelerated, Luoyang Xinqianglian Slewing Bearings Co.Ltd(300850) and other enterprises have made breakthroughs in spindle bearing technology. With the gradual substitution of domestic bearings for imported bearings, the market share of Chinese enterprises is expected to gradually increase.
The industrial chain extends to the wind power bearing and gearbox business, opens the second growth curve, and raises funds by fixed increase to provide financial guarantee for production expansion. Bearings and gearboxes are the extension of high value-added products downstream of the company’s forging industry chain. As a precision processing and forging enterprise of upstream parts of wind power, the company has mature production technology and high-quality customer resources, and has a strong cost advantage in developing bearing and gear business. Based on its own wind power bearing manufacturing technology and integrating foreign advanced technology, the company will carry out product R & D focusing on 3-8mw wind power bearings. In 2021, the company will raise an additional 1.47 billion yuan, mainly for bearing and gear deep-processing projects to provide financial guarantee for business extension.
Profit forecast and investment suggestion: the leading position of the company’s wind power tower flange is stable, and the manufacturing capacity advantage of the company’s large flange is more prominent under the trend of large-scale fan. At the same time, the company’s industrial chain extends downstream to the bearing and gearbox business, and the performance will be gradually realized in 2022. The compound growth rate of the company’s net profit attributable to the parent company in the next three years will be 23%. We give the company 35 times PE in 2022, the target price is 68.25 yuan, and give a “buy” rating for the first time.
Risk tip: the risk that the company’s production capacity fails to be put into operation on schedule; The risk that the price of raw materials continues to rise and the profitability of the company decreases; Risks of policy changes; Risk of exchange rate fluctuations.
