Chengdu Leejun Industrial Co.Ltd(002651) (002651)
Event: on December 27, 2021, the company announced that the wholly-owned subsidiary received the bid winning notice from sinoironpty Ltd of Australia, and the bid winning project amount was about 240 million yuan, accounting for 29.35% of the company’s operating revenue in 2020.
The high-pressure roller mill has won large overseas orders, with strong main business and outstanding hematopoietic ability. According to the disclosure of the company’s 21 year interim report, the income from the manufacturing business of grinding system and its supporting equipment accounts for 58.98%, which is the largest main business of the company. As the single manufacturing champion in the subdivided field of roller press in China, the company has realized the process from equipment introduction to import substitution earlier, and has obvious core competitive advantages. This order also confirms that the company has sufficient orders on hand, the main business still has strong hematopoietic ability, and the endogenous and external extension is expected to continue to improve the global market share in the future. We expect that most of the company’s orders are expected to be released in 2022, contributing to the rapid growth of annual revenue in 22 years.
With the increase of mine operating rate and the promotion of “double carbon” policy and technical transformation, the prosperity of double wheel drive roller press continues. Benefiting from the improvement of the epidemic situation and shipping expectation next year, we expect the overall operation rate of Mines next year to be higher than this year. Roller press and roller mill can save energy by 20% – 30% and increase production by 40% – 50% compared with traditional cone mill and ball mill. They are energy-saving and consumption reducing products mainly encouraged by the national development and Reform Commission. The large roller press and roller mill produced by the company have been replaced by domestic products, benefiting from the recovery of downstream demand and the growth of technical transformation demand, which is expected to continue the upward performance elasticity.
Benefiting from the accelerated deployment of advanced air force equipment and domestic large aircraft, the company’s aviation parts manufacturing business will continue its high growth trend. We expect that the average annual growth rate of military expenditure during the 14th Five Year Plan period will be between 6% – 8%. Based on the importance of modern war on air control, military expenditure will focus more on the assembly of advanced air force equipment and the upgrading of old equipment. Benefiting from the accelerated assembly of China’s fourth generation aircraft and shipborne aircraft, as well as the rapid launch of domestic large aircraft, the high prospect of aviation parts manufacturing industry will continue. Dekun aviation, a wholly-owned subsidiary of the company, is a scarce leader in tooling design and manufacturing, CNC precision machining, sheet metal processing and component assembly business in the aviation field. Benefiting from the high view of the downstream, we expect the revenue of the company’s aviation parts manufacturing business to continue to increase in the next three years.
Profit forecast and investment rating of the company: we expect the net profit of the company from 2021 to 2023 to be RMB 281 million, RMB 480 million and RMB 697 million respectively, corresponding to EPS of RMB 0.27, RMB 0.46 and RMB 0.67 respectively. The current share price corresponds to PE values of 48, 28 and 19 times from 2021 to 2023 respectively. Optimistic about the growth of the company’s roller mill business and aviation parts manufacturing business, and maintain the “strongly recommended” rating.
Risk tip: the business expansion of roller mill is less than expected, and the business expansion of aviation parts manufacturing is less than expected.
