\u3000\u3 Bohai Water Industry Co.Ltd(000605) 123 Wuxi Paike New Materials Technology Co.Ltd(605123) )
Event: the company released its 2021 annual report, realizing revenue (1.733 billion yuan, + 68.65%), net profit attributable to the parent company (304 million yuan, + 82.59%), deducting non net profit (286 million yuan, + 91.14%).
Aerospace Forgings increased significantly, and the forward-looking indicators of the balance sheet performed prominently
Benefiting from the steady growth of aerospace business orders, the company achieved a significant increase in revenue and profit. In the whole year, it produced forging products (64000 tons, + 0.01%) and completed sales (66100 tons, + 13.78%):
1) in the field of aerospace, the company achieved sales in 2021 (716 million yuan, + 117.77%), and the gross profit margin of Aerospace Forgings increased by 3.87 PCT to 46.21% year-on-year, reflecting the improvement of profitability with the increase of the delivery of batch products, including:
① aviation business, seizing the opportunity of military aviation demand growth, has made a breakthrough in the development of superalloy and titanium alloy products. In international business, Luoluo and Ge orders have been continuously promoted, and the first article development of multiple part numbers has been started, and some batch production orders have been received;
② aerospace business, carried out research and development around the requirements of major equipment such as missiles and launch vehicles, successfully passed the supplier review of an Institute of Aerospace Hi-Tech Holding Group Co.Ltd(000901) group, participated in the development and docking of a new generation of manned rocket project, and laid a solid foundation for subsequent engineering support.
The sales of nuclear power and petrochemical products increased by 7.2 billion yuan, but the sales of nuclear power and petrochemical products decreased by 9.2 billion yuan, driven by a solid year-on-year increase of nuclear power production license, which further reduced the sales of nuclear power and petrochemical products to 9.2 billion yuan; ② In the wind power market, the company has successfully obtained the CE certification of wind power and will increase efforts to invest in the development of wind power products.
The gross profit margin decreased slightly and the net profit margin increased year-on-year. The gross profit margin of the company decreased by 0.51pct to 29% in 2021, which is expected to be mainly due to the change of product structure, and the net profit margin increased by 1.34pct to 17.54%. If the net profit margins of 21q1-21q4 are 17.15%, 16.04%, 15.31% and 20.75% respectively by quarter, the obvious increase of 21q4 net profit margin is expected to be mainly due to the income tax of - 11 million in the current quarter. Referring to the annual reports of 2020 and 2021, The corporate income tax rate has been restored from 25% to 15%.
Balance sheet items reflect that downstream demand is still in a strong trend. Prepayments increased by 134.38% year-on-year, mainly due to the company's increase in material preparation, while the increase in the company's advance payment also led to a 50% increase in contract liabilities. At the same time, the increase in raw material preparation and products in process due to the increase in orders led to a significant increase of 77.02%; The net operating cash flow decreased by 54.1% year-on-year due to the simultaneous increase of accounts receivable and inventory due to the increase of orders. Considering that the company is one of the few enterprises in China that can supply ring forgings in high-end fields such as aviation, aerospace and ships, and has entered the supply chain system of Hangfa group, aerospace science and industry group, Aerospace Hi-Tech Holding Group Co.Ltd(000901) group, China Shipbuilding Heavy Industry and China shipbuilding group, it is expected that there is sufficient room for the improvement of military products in the future, which is expected to continue to maintain a rapid growth rate and drive the continuous release of the company's performance, Looking forward to 2022, it is expected to enter a high growth channel.
The vigorous development of the engine industry drives the continuous increase of aviation business. 1) from the perspective of the competition pattern, because the forging products have the characteristics of multi specification and customization, the company needs to participate in the design finalization in the early design stage of equipment, and will not be replaced once the supply relationship is determined. The entry barrier of the industry is high and the pattern is relatively stable; 2) From the perspective of supply-demand relationship, the replacement of Chinese new models of fighters brings increased demand for engines, and the proportion of superposition and localization continues to increase. It is expected that the engine industry will usher in a period of rapid development. As one of the core suppliers of engine ring forgings in China, with the quantity of in-service models and the batch production of pre researched models, the aviation business is expected to continue to maintain rapid growth, Moreover, as a heavy asset industry, the forging industry shows scale effect with the increase of volume, and it is expected that there is still room for improvement in profitability.
Investment suggestion: the company is a leading enterprise in the field of ring forgings in China. Military products have entered the supply system of Hangfa group, Aerospace Hi-Tech Holding Group Co.Ltd(000901) group and Aerospace Science and industry group. Considering that the field of aeroengine, rocket and missile is in the stage of rapid development, it is expected that the company's aerospace industry is expected to continue to maintain rapid growth, and with the continuous increase of military products business with high gross profit margin, Will lay a firm foundation for the company's performance growth; The downstream power and petrochemical industries of civil products are pillar industries, which will continue to consolidate the basic market for the company. It is estimated that the net profit of the company from 2022 to 2024 will be 419 million yuan, 562 million yuan and 730 million yuan respectively, with corresponding valuations of 33, 25 and 19 times respectively, maintaining the "Buy-A" rating.
Risk warning: aerospace business is not as expected; Progress in the field of civil products was lower than expected.
