\u3000\u3 Guocheng Mining Co.Ltd(000688) 059 Zhuzhou Huarui Precision Cutting Tools.Co.Ltd(688059) )
Key investment points:
Zhuzhou Huarui Precision Cutting Tools.Co.Ltd(688059) issue annual report. In 2021, the company achieved an operating revenue of 485 million yuan, a year-on-year increase of 55.51%; The net profit attributable to the shareholders of the listed company was 162 million yuan, a year-on-year increase of 82.41%. The basic earnings per share is 3.85 yuan. The company plans to distribute a cash dividend of 12 yuan (including tax) for every 10 shares.
The annual report grew rapidly, benefiting from the domestic substitution of cemented carbide NC blades
In 2021, the company achieved an operating revenue of 485 million yuan, a year-on-year increase of 55.51%; The net profit attributable to the shareholders of the listed company was 162 million yuan, a year-on-year increase of 82.41%. High performance growth.
In the revenue structure of the company in 2021, the operating revenue of blades was 481 million, accounting for 99.16% of the main revenue. Among the blades, the operating revenue of turning blades is 325 million, accounting for 67.01% of the main revenue; The operating revenue of milling blades is 144 million, accounting for 29.69% of the main revenue; The operating revenue of drilling blades is 12 million, accounting for 2.57% of the main revenue.
The performance of the company's Cemented Carbide CNC blade products has been continuously improved, the production capacity has been gradually released, the channels have been continuously improved, and the product sales volume has increased, which has effectively promoted the growth of revenue and profit. At the same time, the import business of some high-end CNC blades in Europe, America, Japan and South Korea has been hindered due to the covid-19 epidemic, and the willingness of end users to choose domestic blades has been increasing, which has promoted the growth of the company's revenue and profit.
The company has strong profitability, stable gross profit, slight increase in net interest rate and good cash flow
In 2021, the gross profit margin of the company's overall sales was 50.3%, a slight decrease of 0.6pct year-on-year; The net interest rate was 33.44%, with a year-on-year increase of 4.93pct. In 2021, the company's weighted roe was 21.29%, down 2.98pct from last year.
In 2021, the gross profit margins of the three main products were relatively stable, including turning blade gross profit margin of 47.31%, milling blade gross profit margin of 55.86% and drilling blade gross profit margin of 79.31%.
The profitability of the company is strong, the gross profit margin is stable at around 50%, the net profit margin has increased from 28% last year to 33%, and the roe has always remained above 20%, which is prominent in the machinery industry.
In 2021, the company's net operating cash flow was 2.06, with a year-on-year increase of 104.06%, basically synchronized with the net profit attributable to the parent company, and the company's operating cash flow was good.
The company's twice financing capacity investment accelerated, and the performance entered the acceleration period
In 2021, the company produced 79.586 million CNC blades, with a year-on-year increase of 37.28%.
In 2021, the company sold 823381 million tablets, a year-on-year increase of 52.16%. Among them, 497262 million turning blades were sold, with a year-on-year increase of 64.71%; 305074 million milling blades were sold, with a year-on-year increase of 35.61%; 2.1045 million drilling blades were sold, with a year-on-year increase of 47.52%.
In 2021, the average unit price of the company's CNC blade was 5.90 yuan / piece, an increase of 0.14 yuan / piece year-on-year. The company's IPO raised investment project, the construction project of precision CNC tool digital production line, plans to invest 270 million yuan for a two-year construction period. After the construction is completed, 30 million cemented carbide CNC blades, 5 million cermet CNC blades and 2 million cemented carbide integral tools will be added. As of the reporting period of the annual report, the raised investment project has completed 40.92%, and is expected to reach production in the third quarter of this year.
The company plans to raise 400 million in convertible bonds, add 500000 precision CNC cutter body products and 1.4 million high-efficiency drilling tools. The construction period is two years. It is expected to reach production in 2023, achieve an annual income of 408 million yuan and a net profit of 114 million yuan.
Through two financing, the company further expanded its production capacity and expanded from blades to cutting tools, further enhancing the value of the industrial chain. The performance of capacity launch has entered an accelerated period.
The market space of NC cutting tools is large, and the domestic substitution is in progress
With the implementation of the 13th five year plan and the deepening of China's supply side structural reform, China's manufacturing industry is moving rapidly towards automation and intelligence. The transformation and upgrading of the manufacturing industry promotes the restorative growth of the tool consumption market. In 2020, the market scale of cutting tool industry reached 42.1 billion yuan, an increase of 30.95% compared with 2016. At the same time, according to the statistics of the fourth cutting tool user survey data analysis report, by the end of 2018, the use of cemented carbide cutting tools in China's machining industry accounted for 53%. According to this calculation, the market scale of cemented carbide cutting tools in China will be about 22.3 billion yuan in 2020. At the same time, the proportion of cemented carbide cutting tools used in China still has great room for improvement compared with 63% of the world.
Since its establishment, the company has always focused on the R & D and production of CNC blades. It has become a well-known manufacturer of cemented carbide cutting tools in China. The output of the company has been in the forefront of China's industry for many consecutive years. According to the statistics and certification of China Tungsten Industry Association, the output of cemented carbide NC blades of the company ranked second among Chinese enterprises in 2020, third in 2019 and second in 2018. The company's core products have reached the advanced level in China in terms of cutting performance such as machining accuracy, machining efficiency and service life, and have entered the middle and high-end market in China occupied by European, American, Japanese and Korean tool enterprises for a long time.
Through two times of financing, the company has gradually entered the high-end market, and further marched into precision CNC cutter body and drilling cutter, so as to open up the industrial chain and expand the added value of the industrial chain. In the medium and long term, CNC cutting tools are made in China and can be controlled independently. In 2021, the company's operating revenue was 485 million yuan, accounting for nearly 2% of the market according to the market space of 22.3 billion yuan. There is huge growth space for domestic substitutes.
Profit forecast and valuation
With the launch of the company's raised investment capacity and the launch of new products such as knife bodies and knives, we expect the company to usher in a performance release period. We predict that the operating revenue of the company from 2022 to 2024 will be 692 million, 981 million and 1302 million respectively, and the net profit attributable to the parent company will be 224 million, 314 million and 411 million respectively. The corresponding PE will be 25.05x, 17.85x and 13.66x respectively. It will be covered for the first time and given a "buy" rating.
Risk tips: 1: the macro economy is less than expected; 2: Downstream demand is lower than expected; 3: The price of raw materials rose and the gross profit margin fell; 4: The progress of the company's fund-raising projects is less than expected.
