\u3000\u3 Guocheng Mining Co.Ltd(000688) 122 Western Superconducting Technologies Co.Ltd(688122) )
Report summary
The performance of domestic high-end alloy leaders continued to grow steadily. The predecessor of the company, superconducting Co., Ltd., was established in 2003, completed the joint-stock reform in 2012 and landed on the science and innovation board in 2019. The company is the main supplier of high-end titanium alloy bar, wire and forging stock in China. It is the only manufacturer of low-temperature superconducting wire rod in China and the only whole process manufacturer of niobium titanium ingot rod, superconducting wire rod and superconducting magnet in the world. In recent years, the demand of China's high-end alloy market has been strong, the product structure of the superposition company has been continuously optimized, the scale effect has gradually appeared, and the performance has shown sustained and steady growth. In 2020, the revenue was 2.113 billion yuan, a year-on-year increase of 46.10%, the net profit attributable to the parent company was 371 million yuan, a year-on-year increase of 134.31%, and the comprehensive gross profit margin was 37.91%. The CAGR of revenue in 20162020 was 21.24%, and the CAGR of net profit attributable to parent company in 20162020 was 23.61%.
Focus on aviation titanium alloy, benefiting from the large volume of military aircraft and the batch production of domestic civil aircraft. In 2020, the sales volume of titanium materials for aerospace in China accounted for only 18.4%, far lower than the international level of 50%. With the accelerated large-scale production of China's advanced military aircraft and the batch production of domestic large aircraft, the demand for titanium materials for aviation is expected to continue to grow rapidly. We calculate that the demand for titanium materials for military aircraft in China is expected to exceed 120000 tons from 2021 to 2030, and the demand for titanium materials for civil aircraft in China is expected to exceed 160000 tons from 2021 to 2040. The company is a core supplier of titanium alloy for military aviation in China. In recent years, the capacity utilization rate and production and marketing rate have remained high. With the production of fixed increase projects, the capacity bottleneck is expected to break through, and the performance of titanium alloy will be further thickened.
Low temperature superconducting technology is the world's leading technology and is expected to benefit from the large demand for MRI and MCZ. In terms of MRI, in 2018, the number of MRI per million people in Japan / the United States was 55.2 / 40.4 respectively, while the number of MRI per million people in China was only 9.7 in the same period. With the improvement of national living standards and the acceleration of population aging, there is a strong demand for clinical examination in China. With the strong support of national policies, the MRI market demand is expected to accelerate. We estimate that the demand for superconducting wire for MRI in China is expected to reach 4084 tons in 2025. In terms of MCZ, the market scale and technical level of China's semiconductor equipment continue to improve, and the demand for superconducting magnets for MCZ is expected to accelerate. The company is a global leader in superconducting technology and industrial layout. In recent years, it has increased the capacity construction of superconducting wire rod for MRI, and MCZ magnet has achieved stable delivery. With the release of downstream demand in China, the performance of superconducting wire rod is expected to continue to grow at a high level.
Cut into the superalloy market and open up the second growth curve. Benefiting from the development of advanced aeroengine, gas turbine and other fields, the market demand for superalloys in China has increased rapidly in recent years, which is expected to reach 39 billion yuan in 2022. Superalloy is the main material of hot end components of aeroengine. In modern aeroengine, the amount of Superalloy accounts for 40% - 60% of the total weight of the engine. We estimate that the average annual demand (Procurement + maintenance) of superalloys in China's military aviation development market is expected to reach 24 billion yuan in the next decade, and the average annual demand (Procurement + maintenance) of superalloys in China's civil aviation development market is expected to reach 20.8 billion yuan in the next two decades. The company is a cutting-edge high-temperature alloy company in China. It has obtained the qualification of military and civil high-temperature alloy supply. Superalloy and titanium alloy are two main materials for military aviation manufacturing, and downstream customers are widely distributed. With the new production capacity reaching the production capacity and successful product certification, superalloy will become a new performance growth point of the company.
Profit forecast and Valuation: we expect the company's revenue from 2021 to 2023 to be 29.35/39.82/51.31 yuan respectively. Due to the higher than expected profit margin caused by scale effect and period cost control, and the accelerated delivery progress of the company, we increase the company's net profit attributable to the parent company to 743/11.141464 million yuan (the previous value of 706 / 824 / 1144 million yuan), and the corresponding EPS is 1.60/2.40/3.15 yuan respectively, The corresponding PE is 52.84/35.25/26.82 times respectively. The company is a leading enterprise in China's high-end titanium alloy industry, with a high proportion of military products. At the same time, it has strengthened the layout of Superalloy products in recent years, which will benefit from the rapid and large-scale downstream demand. The company will be given a PE valuation of 40 times in 2022 and a "overweight" rating.
Risk warning: the progress of military aircraft train loading is less than expected; Production capacity construction is less than expected; The increase of gross profit margin is less than expected; Market space measurement deviation risk; The public materials used in the research report may have the risk of information lag or untimely update.
