\u3000\u3 China Vanke Co.Ltd(000002) 132 Henan Hengxing Science & Technology Co.Ltd(002132) )
The metal products industry is a leader in the field of new materials and new energy Henan Hengxing Science & Technology Co.Ltd(002132) business layout: metal materials (steel strand, steel cord, diamond wire, etc.) and fine chemicals (organic silicon). The products are widely used in automobile tires, power cables, high-speed railways, ports, photovoltaic Cecep Solar Energy Co.Ltd(000591) silicon wafer cutting and other industries. In 2021, the company has four physical manufacturing bases in Henan, Inner Mongolia and Guangxi, which can produce products of more than 40 specifications in seven categories. It is a leading enterprise in the subdivision of China’s metal products industry.
Traditional business: the cornerstone of revenue and steadily expand production. Metal products business is the traditional business of the company, accounting for more than 90% of the revenue in 2020. The demand heat of new energy vehicles and radial tire industry continues, and the demand for steel cord, the core framework material, increases. The expansion of infrastructure scale and the increase of power grid construction have driven PC steel strand and other products to usher in new development opportunities. The company’s 200000 ton prestressed steel strand project for Expressway and Qinzhou, Guangxi is also advancing as planned.
Vajra line: the demand for photovoltaic is booming and is expected to be among the top players. Vajra wire is a revolutionary progress for Cecep Solar Energy Co.Ltd(000591) industry. It has many advantages of “high-speed cutting, environmental protection production and low cost”, which effectively promotes the large-scale application of photovoltaic products. With the boom of photovoltaic installation, the demand for diamond wires has soared. We predict that the total demand for diamond wires in the photovoltaic industry will be 169.79 million km in 2025, and the compound growth rate of diamond wire market scale from 2021 to 2025 is expected to exceed 20%. The company’s production expansion plan has been implemented very quickly. The site construction required to expand production capacity in the second quarter of 2022 has been ensured. The company expects to form an annual production capacity of 46 million km of diamond line in the future, which is expected to become a leading player in the industry. The company is the first manufacturer to promote the eight thread machine in the industry. The new generation of “Sixteen thread machine” of diamond thread products has been successfully developed and put into production; And the company has mastered the core process technology of the whole production chain of 40-50 micron diamond wire from wire rod to finished product. It is the only diamond wire enterprise with the whole industry chain technology in the industry (bus drawing, diamond powder plating and sorting, diamond wire plating and equipment).
Silicone: broad prospects, enjoy the cost advantage. Silicone products have a wide range of applications, and the development of new industries drives the upgrading of demand. The output of the company’s wholly-owned subsidiary after expansion can reach 120000 tons, ranking the leading position in the industry. The production area is rich in resources and can use local materials to reduce transportation costs. Low energy and transportation costs further improve profitability.
Profit forecast and investment rating: we expect the company to achieve revenue of 3.43 billion yuan, 8.07 billion yuan and 9.7 billion yuan from 2021 to 2023, with a year-on-year increase of 21%, 136% and 20%; The net profit attributable to the parent company was 160 million yuan, 790 million yuan and 1 billion yuan respectively, with a year-on-year increase of 33%, 385% and 27%. Considering the business structure of the company, Shandong Daye Co.Ltd(603278) (mainly steel cord and other businesses), Yangling Metron New Material Co.Ltd(300861) (mainly diamond thread business), Hoshine Silicon Industry Co.Ltd(603260) (the profit of silicone business accounts for a relatively high proportion) are selected as comparable companies. The average PE of the company from 2022 to 2023 is 16 / 13 times, and the PE of the company from 2022 to 2023 is 10 / 8 times lower than that of comparable companies. Considering that the company has entered the diamond line business of high prosperity track, with rapid capacity growth and stable operation of traditional business, the company is given a “buy” rating for the first time.
Risk warning: product price fluctuation; The project progress is not as expected; Changes in industrial policies, etc.
