\u3000\u3 Guocheng Mining Co.Ltd(000688) 308 Oke Precision Cutting Tools Co.Ltd(688308) )
Events: ① on March 29, the company released its annual report for 2021, with annual revenue of 990 million yuan, yoy + 41.04%; The net profit attributable to the parent company was 222 million yuan, yoy + 106.82%. In Q4 alone, the company achieved a revenue of 232 million yuan, yoy + 11.96%; The net profit attributable to the parent company was 52 million yuan, yoy + 75.01%. ② The company issued a fixed increase plan and proposed to raise no more than 800 million yuan for the construction of CNC Tool Industrial Park by its subsidiary.
Core view: the performance is in line with expectations, and the fixed increase will help the construction of NC Tool Industrial Park. In 2021, the company’s performance growth rate increased significantly, mainly due to: ① strong downstream demand, continuous improvement of sales channels, rapid release of new production capacity, and booming production and marketing; ② Continuously strengthen technological innovation and product development, optimize product structure and enhance profitability; ③ Investment income and government subsidies increased. The company’s IPO investment project is about to be put into operation. At the same time, the company will raise funds to speed up the construction of CNC Tool Industrial Park. Looking forward to 2022, with the continuous expansion of the company’s production capacity and the continuous optimization of product structure, the performance is expected to maintain rapid growth.
The performance was in line with expectations, and the proportion of NC tool business revenue increased steadily
The company’s performance is in line with expectations. In 2021, the revenue side of the company increased by 41.04% year-on-year, mainly due to the strong downstream demand, the rapid release of the company’s new NC tool production capacity and the booming production and sales. The profit side increased by 106.82% year-on-year, and the growth rate of the profit side was faster than that of the income side.
In terms of products: ① cemented carbide products, the sales volume is 1748 tons (YoY + 24.41%), the revenue is 532 million yuan (YoY + 34.05%), the revenue accounts for 53.74% (a year-on-year decrease of 2.80 PCT), and the gross profit margin is 24.53% (a year-on-year increase of 1.77 PCT); ② NC cutting tools achieved sales of 77.11 million pieces (YoY + 43.11%), revenue of 455 million yuan (YoY + 50.14%), revenue accounting for 45.96% (year-on-year increase of 2.79 PCT), and gross profit margin of 45.92% (year-on-year increase of 3.09 PCT). Since 2017, the proportion of the company’s NC tool business revenue has increased from 31.13% to 45.96%. It is expected that the proportion of NC tool business revenue will further increase with the acceleration of the domestic replacement process of machine tool tools, the improvement of the company’s product quality and the continuous expansion of production capacity.
The profitability has been significantly improved, the R & D investment has been continuously increased, and the profitability of new products has been significantly improved. In 2021, the company achieved a gross profit margin of 34.38%, a year-on-year increase of 2.93 PCT, and the gross profit margin of the company increased against the trend against the background of the rise in the price of raw materials. Our judgment is mainly as follows: ① the supply of machine tools and cutting tools in 2021 was in short supply, and the company raised prices many times to offset the pressure of the rise in the price of raw materials; ② The company’s product structure continues to be optimized, and the proportion of data tools with high gross profit continues to increase; ③ The scale effect brought by the release of new capacity. The net profit margin on sales was 22.44%, with a year-on-year increase of 7.14 PCT, mainly due to the improvement of the company’s expense control ability and the increase of non recurring profits and losses. During the period of realization, the expense rate of the company was 10.74%, with a year-on-year decrease of 2.31 PCT, of which the sales expense rate was 2.79%, with a year-on-year decrease of 0.82 PCT; The management fee rate was 2.95%, with a year-on-year decrease of 0.97 PCT; The R & D expense ratio was 4.95%, with a year-on-year increase of 0.23pct; The financial expense rate was 0.06%, a year-on-year decrease of 2.31pct.
The company continued to increase R & D investment. On the one hand, the annual R & D investment in 2021 reached 49 million yuan, yoy + 47.88%, and continued to increase capital investment; On the other hand, the company’s technical personnel expanded to 160, with a year-on-year increase of 70.21%, accounting for 18.48% of the total personnel. The development of the company’s product series is smooth, and the achievements of new products are remarkable. ① Improve the product series: improve the selch brand terminal series, stainless steel finishing and semi finishing, multi angle milling cutter, mold milling cutter brand, small part processing, thread blade and other proprietary markets or special products; ② Cermet products: increased the product development of cermet blades and high-performance cermet serrations, focused on the performance benchmarking of cermet products, imported high-end cermet brands, and formed batch stable orders. ③ Overall solution: it has increased the development of overall tool solutions for end customers, mainly including the design of tool body and tool system supporting NC blade, the development of bar and overall cemented carbide tools, and broken through the tool supporting projects and tool scheme optimization projects of key end customers. The continuous increase of R & D funds and personnel investment has helped the continuous improvement of the company’s product performance and the gradual improvement of the company’s product series.
Looking forward to 2022, the company’s production capacity will continue to expand, and the fixed increase will help the construction of NC Tool Industrial Park. The company’s IPO raised and invested 40 million pieces of high-end NC blade intelligent manufacturing base construction project will be put into operation soon. At the same time, the unit price of the new capacity blade is more than 20% higher than the existing capacity, and the volume and price rise together. It is expected that the company’s NC blade production capacity will exceed 100 million pieces in 2022. The company plans to increase the market of high-end CNC cutting tools by no more than 800 million. After the project is completed, it can form an annual production capacity of 1000 tons of high-performance bars, 3 million integral cemented carbide cutting tools, 200000 sets of CNC cutting tools, 5 million pieces of cermet blades and 10 tons of cermet sawteeth. On the one hand, the construction of the industrial park will alleviate the pressure on the company’s production capacity and enhance its competitiveness; On the other hand, it will lay the foundation for the company to further enrich the overall product structure and solutions.
Investment suggestion: we expect the company to realize revenue of 1.292 billion yuan, 1.603 billion yuan and 1.941 billion yuan respectively from 2022 to 2024, yoy + 30.45%, 24.06% and 21.08%; The net profit attributable to the parent company is 292 million yuan, 366 million yuan and 446 million yuan, yoy + 31.41%, 25.24% and 21.85%; Corresponding to pe19 4、15.5、12.7X。 The six-month target price is 73 yuan, corresponding to the 25X valuation in 2022, maintaining the investment rating of buy-a.
Risk tip: the market competition intensifies, the domestic substitution process is less than expected, and the manufacturing industry is declining.
