Jiangsu Shentong Valve Co.Ltd(002438) teleconference
Records of research activities
Venue: Office of the Secretary of the board of directors
Meeting time: 9:00-10:00, 15:30-16:30, March 11, 2022
Moderator: Zhang Qiqiang meeting minutes: Chen Mingdi attendance: 48 1. The meeting began
The conference was organized by Guosen Securities Co.Ltd(002736) , Orient Securities Company Limited(600958) respectively. Mr. Qi Qiang, vice president and Secretary General of the company, attended the conference at invitation. First of all, he thanked the institutional investors who participated in the conference and introduced the basic situation of the company, the development strategic planning of the company and the progress of recent main work to the investors, At the same time, it emphasizes the agreement on abiding by the commitment letter and the relevant provisions on information disclosure of listed companies. 2、 Q: what is the main background and project progress of the cooperation between the company and Dewei? A: Devi valve is one of the well-known enterprises in China’s valve industry. It has been deeply engaged in the overseas market for a long time. It is a qualified supplier for many large international oil and gas enterprises. It has strong market channel advantages and product advantages in the field of petroleum and petrochemical, and has production bases in Suzhou and Sichuan. If this transaction is completed, the company will become the controlling shareholder of Dewei valve, which will help the company further develop market channels, enrich product lines and accelerate the layout and expansion of the company in overseas markets and petroleum and petrochemical fields. At present, the company is organizing intermediaries to conduct due diligence as planned, and the specific cooperation scheme will be announced after the due diligence is completed according to the negotiation results of both parties. Q: what is the current operating cash flow of the company? Is it related to the delivery cycle of nuclear power? A: in recent years, the company’s operating cash flow is generally good. The data in 2021 are still under accounting. The annual operating cash flow of the company in 2019 and 2020 is slightly lower than the company’s net profit, mainly because the company’s business orders and revenue have maintained steady growth. In this growth process, Production and operation materials and accounts receivable have increased to a certain extent. The nuclear valve orders of the company’s new nuclear power projects generally have a delivery cycle of 2-3 years. After delivery, revenue is recognized and accounts receivable are formed, including about 10% of the quality assurance deposit. The return speed of the quality assurance deposit is relatively slow. Generally, it can be returned two years after delivery, so there is some occupation of funds. Q: what is the company’s overall development strategy in 2022? A: in 2022, the company will continue to maintain a sustained and steady development strategic plan, maintain the market position of metallurgical special valves in the field of metallurgy, and continue to expand the business of “valve housekeeper” in the field of general valves; In the field of energy and chemical industry, we will continue to expand the market in the fields of large-scale refining chemical valves, LNG low-temperature valves, low-temperature hydrogen valves and so on; At present, there are many new nuclear power projects under bidding in the field of nuclear power valves. The delivery pressure of nuclear power valves is high in 2022. The company will make preparations for production in advance to ensure that relevant product orders can be delivered in time with quality and quantity as agreed in the contract. At the same time, the company will continue to track the bidding progress of each project; The company will continue to track the follow-up projects of spent fuel reprocessing; In the field of hydrogen energy, companies should further focus on market demand, do a good job in business layout, market research and expansion. Q: what are the main technical barriers in the nuclear power sector? A: in the field of nuclear power, from equipment manufacturing, the main threshold is license. Nuclear valves have very high requirements for product quality and quality assurance system. The national nuclear safety administration adopts a license system for this area, and the supply conditions in this regard can be met only after obtaining evidence; Secondly, in the process of bidding, the past supply performance and experience of the company will generally be investigated; Third, in the bidding process, the technical scheme and business price of the company will also be taken as important considerations. Q: what is the service life of the supporting products of the spent fuel treatment unit and the service life and value of the replacement consumables? How big is the market demand? A: the products provided by the company in the field of spent fuel treatment engineering construction are mainly divided into three categories: ① valve products include butterfly valve, ball valve, check valve, etc; ② The system module includes pneumatic sample taking and sending equipment, etc; ③ Storage equipment. Public information shows that the design service life of spent fuel treatment unit is as long as 40-60 years. Among the products supplied by the company in this business, the products with maintenance and replacement needs mainly include: 1) replacement needs for vulnerable and consumable parts such as valve products; 2) The sample bottle of the sampling system in the pneumatic sampling system module is a consumable.
Q: what is the demand growth rhythm of the company’s nuclear power valves? How is the spent fuel project going? A: in recent years, the approval of new nuclear power projects has gradually become normalized. From 2019, 2020 and 2021, more and more nuclear power units have been approved for construction. The demand for clean energy such as nuclear power has been increasingly determined by economic development. The construction of new projects is also approved continuously and stably. In addition to the power generation end of nuclear power, nuclear heating, heating Steam making and other projects can also be seen in the news, and nuclear heating projects are also being tried everywhere, which will increase the market demand for nuclear energy applications in the future. At the same time, with the development of nuclear energy application technology, the demand for spent fuel treatment is also imminent. The company is also signing orders related to capacity construction. In the future construction of nuclear power, the company will continue to make its own advantageous products, and will continue to track the construction progress of the project in the area of spent fuel treatment, Strive for each order to “return the particles to the warehouse”. Q: what is the market demand for metallurgical valves of the company? A: at present, there are several aspects of the demand for valves in the metallurgical industry in the market, which are also the main source of company orders. The first aspect is capacity replacement, such as steel mills. Because of the continuous expansion of the city, many steel mills built on the periphery of the city in the early stage will become steel enterprises in the city slowly with the expansion of the city. These steel enterprises will face capacity replacement by relocation from other places; The second aspect is the emission transformation of environmental protection and dust removal. The national emission requirements for steel mills are becoming higher and higher. In the future, it is more necessary to achieve the ultra-low emission goal of steel enterprises. The demand for valves in these technological transformation is also continuous; The third aspect is the demand of the steel plant itself for the valve in the process of normal operation. The valve itself is in the pipeline and needs to be switched and adjusted frequently. Moreover, the working conditions in the pipeline are very bad. Generally, the service life is 2 to 3 years and needs to be replaced. The iron and steel industry is also a major emitter of emissions and pollution. The state has higher and higher requirements for environmental protection in the iron and steel industry. It puts forward the requirement of “ultra-low emission” in the iron and steel industry and strives to implement the “blue sky defense war”, which will continue to increase the demand for metallurgical valves. Q: please introduce the current application of “valve housekeeper”? A: in recent years, the company has focused on the research and development of “valve housekeeper” business to provide full life-cycle maintenance services for valve applications of steel enterprises. All data of products from production, delivery, installation and use, later maintenance to retirement will be recorded in the database. The company uses big data to analyze valve maintenance needs and application nodes, which can help steel enterprises avoid invalid goods preparation and reduce inventory occupation, help steel enterprises carry out valve equipment application management in the whole life cycle, further solve the difficulties of inventory management in the process of valve application, reduce valve maintenance costs and improve benefits. At present, the valve housekeeper service has been comprehensively promoted and applied in key steel users in China, and achieved good expected results.
At present, the company is promoting to other large iron and steel enterprises, and some customers have been put into trial use. Q: what is the company’s plan for the future valve market in the chemical industry? A: the market space of valves in China’s chemical industry is the largest. In the early stage, the company is mainly engaged in nuclear power and metallurgy. The chemical company entered relatively late. The company mainly focuses on traditional advantageous products such as butterfly valve and ball valve, and has made in-depth expansion in the energy and petrochemical industry, and has achieved good results, Hengli Petrochemical Co.Ltd(600346) , Zhejiang Petrochemical In the key projects of Sinopec and other large refining and chemical enterprises, the company’s products have corresponding applications. In the future, the company will take its own fist products as the starting point and gradually improve its market share. Q: what is the business model and operation of the subsidiary Ruifan energy saving? A: Ruifan energy saving is a wholly-owned subsidiary acquired by the company through cash purchase in 2017. The subsidiary has fully completed its performance commitment in the four-year commitment periods of 2017, 18, 19 and 20. At present, Ruifan energy conservation is fully capable of market-oriented competition, and the existing orders of Ruifan energy conservation are relatively sufficient. At the beginning of 2021, the total amount of EMC contract signed by Ruifan energy conservation and Handan Iron and steel is about 1.6 billion yuan, and the revenue sharing period is 99 months. At present, the project has started construction, with a construction period of about 1.5 years. In addition, Ruifan energy conservation also signed a large project with Jinxi iron and steel at the end of November 2021. The total benefit sharing is expected to be about 1 billion. The project is being promoted according to the planned construction progress. Q: please introduce the business of Wuxi Hongpeng Aviation Power Co., Ltd? A: the company signed the capital increase agreement on Wuxi Hongpeng Aviation Power Co., Ltd. with Wuxi Hongpeng in November 2020. Based on the consideration of expanding the company’s future business field and seeking industrial coordination and cooperation, the company increased the capital of 29812734 million yuan to Wuxi Hongpeng Aviation Power Co., Ltd. and obtained 19.90% equity of Wuxi Hongpeng. Wuxi Hongpeng is mainly engaged in the R & D, design, assembly, production, test, sales and maintenance of general aviation power units. It mainly develops a series of turboprop engines and their turbojet and turboshaft derivatives for fixed wing UAVs, transport aircraft, helicopters, general aviation and other applications. Wuxi Hongpeng has signed three contracts with some Chinese UAV system enterprises. The investigation is over
The second telephone survey started at 9:00 a.m. and 15:30 p.m. on March 11, and lasted about one hour respectively.
There is no disclosure of undisclosed major information in this investor survey.
Jiangsu Shentong Valve Co.Ltd(002438) board of directors March 11, 2022
