Background: the price of nickel, the raw material of superalloy, rose significantly this week. From March 4 to March 11, LME nickel spot settlement price rose from US $29609 / ton to US $48226 / ton, with a cumulative increase of 62.88% this week; The spot price of nickel sector in China’s Yangtze nonferrous metals market rose from 192000 yuan / ton on March 4 to 340100 yuan / ton on March 9, and fell back to 235100 yuan / ton on March 11, with a cumulative increase of 22.45% this week and 53.01% since the beginning of the year.
At present, the price of raw material metal nickel began to fall and gradually entered the controllable stage, which has a predictable impact on the performance of the upstream superalloy material manufacturing and forging and casting enterprises in the aero-engine industry chain, with little impact on the actual performance
Superalloy manufacturing enterprises: at present, the material procurement cost of Superalloy products accounts for about 51.18% of Superalloy revenue, and the mass fraction of nickel in the common superalloy brand GH4169 of aeroengine accounts for 53%. Assuming that metal nickel accounts for 60% of the value of Superalloy raw materials, the cost of Superalloy raw materials is expected to rise by 3.07% for every 10% increase in nickel price. Assuming that the price of nickel, the raw material of superalloy, increases by 53%, the impact on the gross profit margin of Superalloy products is -8.33 PCTs; Assuming that the upstream superalloy manufacturing enterprises can conduct price transmission to the middle and downstream manufacturers, if the price of Superalloy products increases by 10%, the impact of 53% increase in nickel price on the company’s gross profit margin is -2.15pcts.
Midstream forging enterprises of aeroengine: at present, the procurement cost of metal raw materials of forging products (mainly including titanium alloy and superalloy) accounts for about 52.46% of forging revenue. Assuming that the value of Superalloy in raw materials accounts for 50%, if the price of Superalloy raw materials increases by 10%, the procurement cost of materials for Aeroengine forging business is expected to increase by 2.62%, Assuming that the price of forged products in the middle reaches cannot be transmitted to the downstream temporarily, the impact on the gross profit margin of forged products is -1.38pcts. We believe that the raw material inventory preparation cycle of midstream forging enterprises is long, and the actual cost of the issued inventory of forgings is determined according to the individual valuation method. The impact of the price fluctuation of raw materials on the performance of 2022 is very limited, and the medium and long-term impact can also be controlled in a small range.
Investment suggestion: in the short term, the impact of upstream raw material prices on the sector has come to an end. It is expected that the enterprise valuation needs to be repaired under the stable and high boom. We believe that the military industry sector may continue to become the preferred sector of institutional allocation under the background of high prosperity (the preference of over allocation represents positive), Although the performance of a few central enterprises is lower than expected due to the impact of “stable growth” and “equity incentive” recently, the sector may have digested the impact through adjustment (such as Avic Electromechanical Systems Co.Ltd(002013) , Avicopter Plc(600038) etc. return to the bottom area of 5-year historical valuation 10% quantile value again), the sector has entered the stage of stabilizing and undervaluing value (the quantile of historical valuation of the sector is about 20%).
At present, there is no negative situation in the medium and long-term fundamentals of the industry. The logic of weapons and equipment volume continues to strengthen and the progress of new models exceeds expectations. It is recommended to continue to focus on the current high cost performance stage of valuation – the field of promoting the growth rate of new models / new processes in 20222024, and the target with strong valuation advantages after the valuation switch in 2023.
It is recommended to pay attention to the following related stock targets:
1. Materials and processing enterprises in the chain of the flight ”’industry chain and processing like enterprises in the materials and processing of the materials and processing of the industry’chain of the industry chain: the following: ducducducducducducducfromthe materials and processing of the materials and processing of the industry chain:: ‘1 1. The industry chain of the industry’s chain of the industry’s chain of the industry’s chain of the industry’s chain of the industry’s Chain: the following: 60076 Avic Heavy Machinery Co.Ltd(600765) for the theaero-engine industry chain, which is in the expansion period, has entered the repair stage of high prosperity track.
2. New military products market stocks driven by new opportunities such as Chengfei UAV industry chain: Chengdu Ald Aviation Manufacturing Corporation(300696) , Sinofibers Technology Co.Ltd(300777) , Guoguang Electric Co.Ltd.Chengdu(688776) , Xi’An Triangle Defense Co.Ltd(300775) etc;
3. Steady growth military electronics and missile information enterprises with strong valuation advantages: Unigroup Guoxin Microelectronics Co.Ltd(002049) , capacitors, Chengdu Zhimingda Electronics Co.Ltd(688636) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Jiayuan technology, etc;
4. Core barriers / state-owned enterprise reform main engine factory enterprises: Avic Shenyang Aircraft Company Limited(600760) , Avic Xi’An Aircraft Industry Group Company Ltd(000768) , Avicopter Plc(600038) , Avic Electromechanical Systems Co.Ltd(002013) , etc
Risk warning: the price rise of metal raw materials exceeds the market expectation; The rising cost of raw materials cannot be transmitted to the downstream; The order issuance and delivery did not meet the expectations, the development and assembly of new equipment did not meet the expectations, the capacity construction process did not meet the expectations, and the reform process of state-owned enterprises did not meet the expectations.
