\u3000\u3 Shengda Resources Co.Ltd(000603) 985 Jiangyin Hengrun Heavy Industries Co.Ltd(603985) )
Summary of this issue:
The core manufacturer of wind power flange in China, with leading forging technology in the industry Jiangyin Hengrun Heavy Industries Co.Ltd(603985) is an enterprise mainly engaged in R & D, production and sales of rolled ring forgings, forged flanges and other free forgings. The company’s main products include wind power tower flange, slewing ring, forged flange, pipe sector and pipe slab. The main downstream applications are wind power industry, petrochemical equipment industry, metal pressure vessel and construction machinery. The revenue of wind power industry accounts for 76% of the company’s main revenue, which is the company’s main downstream application. The company is one of the few enterprises in China that can manufacture 7.0mw and above Shanghai wind power tower flange. The forging technology is leading in the industry, and the company has an obvious advantageous position in the field of offshore wind power.
The wind power industry has been improving for a long time, and the company’s main business development is worry free. In 2020, the cumulative installed capacity of global wind power will reach 743gw, and the new installed capacity will reach 93gw in 2020. From 2015 to 2020, the average annual compound growth rate of the world’s cumulative installed capacity was 12%. It is expected that the new installed capacity of global wind power will reach 88gw in 2021. According to GWEC data, the new installed capacity of wind power will continue to grow in the future. It is estimated that the global new installed capacity of wind power will be 470gw from 2021 to 2025, with an average annual installed capacity of 95gw, and the new installed capacity will exceed 110gw in 2025. In October 2020, the Beijing Declaration on wind energy proposed to ensure an average annual new installed capacity of more than 50gw during the 14th Five Year Plan period. After 2025, the average annual new installed capacity of wind power in China should not be less than 60GW, reaching at least 800 million KW by 2030 and at least 3 billion kw by 2060. China’s macroeconomic development has obvious resilience, and the demand for oil import and oil refining are growing. It is expected that the average annual growth rate of the main business income scale of the petrochemical and chemical industry will be about 5% from 2019 to 2025. China’s construction machinery has achieved growth for five consecutive years. After entering 2021, China’s sales volume has shown a trend of high opening and low going. However, with the improvement of China’s urbanization rate and the replacement of stock equipment, there is still a good market for construction machinery. Under the background of China’s national economic restructuring and supply side reform, the downstream industry of China’s forging products will continue to grow, and the forging industry will continue to develop. The business development of the company has a long-term driving force. On October 20, the company’s non-public offering of shares was completed, Jining urban investment became the controlling shareholder of the company, and Jining SASAC became the actual controller of the company. The company has the background of state-owned assets.
Layout the wind power bearing and gear forging business and open up new growth space Jiangyin Hengrun Heavy Industries Co.Ltd(603985) 2021 released the plan for non-public development of A-Shares in 2021 (five revisions) on July 26, 2021. The funds raised in this non-public offering are mainly used for the capacity expansion project of large-scale precision machined forgings for annual output of 50000 tons of 12MW offshore wind turbine units, the project of annual output of 4000 sets of large-scale wind turbine bearing production lines and the project of annual output of 100000 tons of gear deep processing. The company will open the processing business of wind power bearings and wind power gears, with a market space of more than 10 billion yuan. At present, a large share of wind power bearings in China is still occupied by overseas enterprises. Among them, high-capacity spindle bearings mainly rely on imports, and there is a huge space for localization and substitution Jiangyin Hengrun Heavy Industries Co.Ltd(603985) has rich forging experience and the technical advantages of joint research and development by customers. It has obvious advantages in manufacturing cost, manufacturing process, technical route and customer basis.
Profit forecast and investment rating: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 439 million yuan, 615 million yuan and 874 million yuan respectively, and the corresponding EPS will be 1.29 yuan / share, 1.81 yuan / share and 2.58 yuan / share respectively. The corresponding PE share price on March 17, 2022 will be 28 times, 20 times and 14 times respectively. For the first time, give the company a “buy” rating.
Stock price catalyst: the national energy administration proposed to launch the “wind control plan for thousands of industrial villages”; All provinces have launched the “14th five year plan” for wind power.
Risk factors: changes in downstream market demand; Exchange rate fluctuation risk; New business product development progress and market development are not as expected.
