\u3000\u3 Bohai Water Industry Co.Ltd(000605) 123 Wuxi Paike New Materials Technology Co.Ltd(605123) )
Event: the company announced on March 16 that in 2021, the operating revenue was 1.733 billion yuan (+ 68.65%), the net profit attributable to the parent company was 304 million yuan (+ 82.59%), the net profit not attributable to the parent company was 286 million yuan (+ 91.14%), the gross profit margin was 29.00% (- 0.51pcts), and the net profit margin was 17.54% (+ 1.34pcts).
Key investment points:
The growth rate of Aerospace Forgings was 118%, driving the improvement of performance; 2021q4 achieved the best performance in a single quarter
In 2021, the company's operating revenue is 1.733 billion yuan (+ 68.65%), the net profit attributable to the parent company is 304 million yuan (+ 82.59%), and the net profit not attributable to the parent company is 286 million yuan (+ 91.14%); Among them, the growth rates of aerospace and petrochemical businesses were 117.77% and 96.99% respectively, driving the rapid improvement of performance. The gross profit margin is 29.00% (-0.51pcts) and the net profit margin is 17.54% (+ 1.34pcts). 2021q4 revenue of 542 million yuan and net profit attributable to parent company of 91 million yuan; A substantial increase of 81.89% and 103.16% year-on-year, creating the best performance in a single quarter.
Downstream application of multi-point flowering, the balance sheet is reflected in sufficient orders
The company focuses on free forging and ring forging of various metal materials, and its products are used in aerospace, petrochemical, electric power and other industries (mainly including ships, machinery, weapons, forging and other industries); The industry covers a wide range of products. According to the business cycle and customer orders of downstream industries, the product structure can be adjusted in time to meet a wider range of customer needs, so that the company has a strong ability to resist market impact and profitability.
In the aviation field, the company's aviation forging products are mainly used in important parts such as aeroengine gearbox, combustion chamber, sealing ring, support ring and bearing ring; Aerospace Forgings are mainly matched with many models of long march series, expedition upper stage and other series of launch vehicles and many models of missiles. During the reporting period, the field of Aerospace Forgings achieved a revenue of 716 million yuan, accounting for 41.31% (+ 9.32 PCTs), a gross profit of 65.81% (+ 19.92 PCTs) and a gross profit margin of 46.21% (+ 3.87 PCTs), which is the most profitable business of the company at present; From 2017 to 2021, the compound growth rate of this business was as high as 39.20%.
The company's petrochemical forgings are mainly flanges and tubesheets for various petrochemical equipment. In 2021, the economic performance of China Petroleum & Chemical Corporation(600028) industry exceeded the expectation, the revenue of the whole industry increased by 30% year-on-year, and the total profit increased by 126.8% year-on-year. Driven by the high boom in the downstream, the company's petrochemical forgings achieved a revenue of 522 million yuan (+ 96.99%) in 2021, nearly doubling. The revenue accounted for 30.13% (+ 4.33pcts), the gross profit accounted for 17.94% (+ 0.83pcts), and the gross profit margin was 17.27% (- 2.30pcts). Affected by the rise of raw materials, the gross profit margin decreased slightly
In the power industry, the company mainly provides forgings for thermal power, wind power, nuclear power and other power equipment. In 2021, affected by the decline of nuclear power business, the revenue of electric power forgings was 172 million yuan (- 32.41%), accounting for 9.91% (- 14.82 PCTs), gross profit accounted for 4.58% (- 20.14 PCTs), and gross profit margin 13.41% (- 16.10 PCTs), showing an obvious decline. The reason may be that in 2020, the company completed the research and development of key component forgings such as Dongzhong steam generator and heat exchanger, and supplied them in batches, realizing domestic substitution, and the gross profit margin of power forgings is high; However, such orders may have some volatility. The revenue of other forgings (mainly including ships, machinery, weapons, forging and other industries) was 142 million yuan (+ 57.29%), mainly due to the growth of mechanical forging products, and the business accounted for a small proportion.
In 2021, the management expense ratio of the company was 3.05% (-1.01pcts), and the scale effect appeared; The sales expense ratio is 1.69% (-0.45pcts); The financial expense rate is 0.07% (-0.22pcts). The R & D investment of the company is 79 million yuan (+ 83.59%), and the R & D expense rate is 4.55% (+ 0.37pcts). The company increases the R & D of products in key fields such as aerospace and new energy.
At the end of the reporting period, the company's inventory was 499 million yuan (+ 77.02%), of which 257 million yuan (+ 92.65%) was raw materials. The company increased orders and prepared materials in advance; Work in progress: RMB 131 million (+ 37.31%); Contract liabilities are 21 million yuan (+ 50%). The advance payment was 120 million yuan (+ 134.38%), mainly due to the increase of raw material preparation. The company mainly adopts the business model of production by sales and purchase by production. The increase of inventory, contract liabilities and prepayment to suppliers all show that the downstream prosperity is high and the company has sufficient orders on hand.
Since its establishment, the company has always focused on the forging industry. Its main products include rolled ring forgings, free forgings, precision die forgings and other metal forgings, which can be used in many industries such as aviation, aerospace, shipbuilding, electric power, petrochemical and other machinery,
In the aviation field, the company is one of the few specialized enterprises in the development and production of aviation ring forgings in China, covering many types of aeroengines in service and in research stage; In terms of international business, the long-term cooperation orders between the company and Luoluo and Ge continue to advance, and some batch production orders have been received in 2021; Meanwhile, we will strive to complete the supplier audit of Safran group in 2022. In the field of aerospace, the company 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 the foundation for subsequent engineering support. In the field of nuclear power, the company has obtained the civil nuclear safety production license, which has laid a solid foundation for further expanding the nuclear power market; In the field of wind power, the company has successfully obtained the CE certification of wind power and will increase efforts to invest in the development of wind power products. In 2022, the company will also focus on the market goal of "aerospace, new energy and import substitution", strengthen market development and increase its share.
The aerospace + new energy production expansion project was promoted in an orderly manner to make full capacity preparations for the rapid growth of performance
In the first half of 2022, the company's "construction project of special alloy materials and components for aeroengines and gas turbines" and "industrialization project of special alloy components for new generation energy equipment" are expected to be completed and put into operation. Among them, "construction project of special alloy materials and components for aeroengine and gas turbine" is the IPO project of the company in August 2020, with an investment of 580 million yuan. After reaching the target, the annual new income is 503 million yuan and the new net profit is 102 million yuan; The "industrialization project of special alloy parts for new generation energy equipment" is to increase the foreign investment of 322 million yuan with its own funds in October 2020. The product positioning is large MW and offshore wind power tower flange, large-size bearing forgings, etc., and the annual sales revenue is nearly 600 million yuan after reaching the production capacity.
Investment suggestions:
\u3000\u30001 . In 2021, the growth rates of aerospace and petrochemical businesses of the company were 117.77% and 96.99% respectively, driving the rapid improvement of performance. 2021q4 achieved the best performance in a single quarter. The company's profitability continued to rise. The increase of the company's inventory, contract liabilities and prepayments to suppliers all indicate that the downstream prosperity is high and the company has sufficient orders on hand.
\u3000\u30002. The downstream application of the company's products is multi-point flowering, and has a rich customer base in aerospace, petrochemical, new energy and other fields. The company has a wide range of industries and a complete range of products. It can adjust the product structure in time according to the business cycle and customer orders of downstream industries, taking into account benefits and efficiency. The company has strong ability to resist market impact and profitability. In 2022, the company will focus on key target markets such as "aerospace, new energy and import substitution".
\u3000\u30003. In the first half of 2022, the "construction project of special alloy materials and components for aeroengines and gas turbines" and the "industrialization project of special alloy components for new generation energy equipment" are expected to be completed and put into operation, with new revenue of 503 million yuan / nearly 600 million yuan respectively, which will significantly increase the performance of the company.
Based on the above point of view, we estimate that the company's operating revenue from 2022 to 2024 will be 2.386 billion yuan, 2.985 billion yuan and 3.709 billion yuan respectively, the net profit attributable to the parent company will be 425 million yuan, 531 million yuan and 661 million yuan respectively, and the EPS will be 3.94 million yuan, 4.91 million yuan and 6.12 yuan respectively. We give the target price of 160 million yuan, corresponding to 41 times, 33 times and 26 times PE respectively.
Risk tip: the impact of epidemic situation and trade friction on overseas business; The progress of raising and investing is less than expected; Fluctuation of raw materials, etc.
