\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 137 Ningbo Boway Alloy Material Co.Ltd(601137) )
Key investment points:
After 30 years of deep cultivation in the industry, China's leading high-end copper alloy company Ningbo Boway Alloy Material Co.Ltd(601137) belongs to Bowei group. It is a private enterprise engaged in manufacturing high-end copper alloy rods, wires, strips and precision filaments for nearly 30 years. It is a leading company in China's high-end copper alloy manufacturing. In 2016, the company acquired Ningbo Connett layout photovoltaic modules, and in 2019, it acquired Ningbo bode hi tech to further increase high value-added precision filament products. At present, the company has a copper alloy production capacity of nearly 200000 tons. With the gradual implementation of 50000 tons of special alloy strip project and 31800 tons of special alloy rod and wire project in bekenhof, Vietnam, it is expected that the copper alloy production capacity will be increased to 270000 tons in the next three years.
China's high-end copper materials depend on imports, and the company's products have high added value and significant advantages in gross profit margin. Although the overall import and export of China's copper processed materials is balanced, it is reflected in the structure. The exported copper materials are still mainly copper tubes and low-end copper foil products with simple process, while the imports are mostly high-end copper foil, copper strip and other products with complex process. In 2020, China exported 538000 tons of copper materials and imported 525000 tons, of which the import of high-end copper strip remained at about 120000 tons throughout the year, The 50000 ton high-end sector and strip project raised and invested by the company is expected to make up for the demand gap in China. The performance of copper alloy mainly has four assessment dimensions: conductivity and thermal conductivity, tensile strength, stress relaxation and bending forming. The higher the comprehensive performance, the higher the price of the product will be. The company focuses on the processing of high-end copper alloy products. Over the years, the company's gross profit margin has continued to lead the industry. With the high-end of the company's product structure, the company's gross profit margin is expected to rise further. In 2020, the gross profit margin of the company's copper processing products was 16.04%, significantly ahead of the average gross profit margin of China's listed copper processing companies.
The downstream application fields of the company have a broad market space, with increased added value and digital transformation, which is expected to achieve "simultaneous increase in volume and price + cost reduction and efficiency". The downstream 5g communication, new energy vehicles and semiconductors of the company continue to enjoy a high boom. In particular, the copper consumption of new energy vehicles is higher than that of traditional internal combustion engine vehicles. According to IDTechEx, the copper consumption of pure electric new energy vehicles can reach 83kg. In the future, the penetration rate of new energy vehicles will continue to increase, which is expected to drive the rapid growth of downstream demand of the company. The company timely expanded its production capacity to match the demand growth. The product added value of the raised investment and production expansion project is high, and the volume and price are expected to rise after the project is put into operation. In addition, the company actively promotes digital reform, and the raised investment project has integrated Bowei's core process technology and digital management and operation system, which is expected to reduce costs and increase efficiency.
The performance of photovoltaic modules bottomed out in 2021, and the bad news subsided in 2022, which is expected to rebound. The company's photovoltaic modules are mainly oriented to the U.S. market. In recent years, the annual revenue has remained stable at about 1.5 billion yuan, and the gross profit margin reached 19.99% in 2020, which is close to the gross profit margin of leading companies in the photovoltaic industry.
In 2021, due to the rise of sea freight, US 201 tariff, the rise of raw material prices and the epidemic in Vietnam, the performance decreased significantly in the first half of the year. With the decline of sea freight, the double-sided module regained the 201 tariff exemption and the return of the United States to the Paris Agreement, the superposition company carried out technical transformation of the photovoltaic production line in 2020, upgraded the battery size from the original 166 to be compatible with 182 / 210, and increased the production capacity from the original 700MW to 1GW, The company's new energy sector is expected to rebound in performance in 2022.
As the leader of copper alloy materials in China, the company's products are widely used in 5g, new energy vehicles, semiconductors and other fields. It is expected to fully benefit from localization and downstream demand growth. In the new materials sector, with the gradual release of 50000 tons of special alloy strip and 31800 tons of special alloy rod and line in Vietnam, the proportion of high-end products is expected to continue to increase. The production capacity of photovoltaic modules of the new energy sector company has expanded from 700MW to 1GW. As the adverse factors such as the epidemic subside, the product sales volume is expected to recover. We estimate that the operating revenue of the company from 2021 to 2023 will be RMB 9.596122.26/13.339 billion respectively, with a year-on-year growth rate of 26% / 27% / 9%, the net profit attributable to the parent company will be RMB 346 / 664 / 844 million respectively, with a year-on-year growth rate of - 19% / 92% / 27% respectively, and the PE from 2021 to 2023 will be 39.04/20.38/16.03 respectively. It will be covered for the first time and given a "buy" rating.
Risk indicates that the capacity expansion is less than expected; The price of raw materials has risen sharply; Downstream application expansion is less than expected; Geopolitical risks brought by international operation; The aggravation of the epidemic affects the operating rate
