\u3000\u3 Guocheng Mining Co.Ltd(000688) 308 Oke Precision Cutting Tools Co.Ltd(688308) )
Key investment points
Event: the company released its annual report for 2021. In 2021, the company achieved a revenue of 990 million yuan, a year-on-year increase of 41.0%; The net profit attributable to the parent company was 220 million yuan, a year-on-year increase of 106.8%. Q4 achieved a revenue of 230 million yuan in a single quarter, with a year-on-year increase of 12.0% and a month on month decrease of 12.1%; The net profit attributable to the parent company was 52 million yuan, with a year-on-year increase of 75.0% and a month on month decrease of 20.9%. The performance has increased rapidly, which is in line with our expectations.
Both supply and demand are booming, and income is growing rapidly; The product structure was optimized and the gross profit margin increased steadily. In 2021, the downstream demand of the company was strong, and the production capacity was released rapidly. The revenue of NC cutting tools increased by 50.1% year-on-year, and the revenue of cemented carbide products increased by 34.1% year-on-year. In 2021, the company's comprehensive gross profit margin was 34.4%, with a year-on-year increase of 2.9 percentage points; Q4 was 34.5% in a single quarter, with a year-on-year increase of 3.0 percentage points and a month on month decrease of 2.1 percentage points. Throughout the year, the gross profit margin of the company has increased steadily. The reasons include: 1) the proportion of NC tool revenue has increased, from 43.2% in 2020 to 46.0% in 2021; 2) The proportion of high-end products of NC cutting tools increased, the proportion of products with unit price greater than 10 yuan exceeded 40%, and the gross profit margin increased by 3.1 percentage points to 45.9%.
The scale effect is obvious, the period expense rate decreases, and the net interest rate increases significantly. In 2021, the company's expense ratio was 10.7%, a year-on-year decrease of 2.3 percentage points; Q4 was 12.9% in a single quarter, a year-on-year decrease of 2.9 percentage points and a month on month increase of 3.6 percentage points. In 2021, the company's net interest rate was 22.4%, with a year-on-year increase of 7.1 percentage points; Q4 was 22.5% in a single quarter, with a year-on-year increase of 8.1 percentage points and a month on month decrease of 2.5 percentage points.
Release the fixed increase plan, build the CNC cutting tool Industrial Park, and continue to promote domestic substitution. The company plans to raise 800 million yuan, which is mainly used for the construction of NC Tool Industrial Park. It will increase the production capacity of 1000 tons of high-performance bars, 3 million integral cemented carbide tools, 200000 sets of NC tools, 5 million pieces of cermet blades and 10 tons of cermet sawtooth. In 2021, the company sold 77.11 million NC blades, with a year-on-year increase of 43.1%. After the completion of the NC Tool Industrial Park project, the company will realize the transformation from blade manufacturer to overall cutting solution supplier, and continue to promote the domestic substitution of industrial tools.
Profit forecast and investment suggestions. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 290 million yuan, 410 million yuan and 530 million yuan respectively, and the compound growth rate of net profit attributable to the parent company in the next three years will be 33.9%. Considering the high barriers in the NC tool industry, the acceleration of domestic substitution and the high certainty of the company's performance, the company gave 30 times PE in 2022, the target price was 86.40 yuan, and maintained the "buy" rating.
Risk tip: manufacturing investment has fallen sharply; The company's capacity expansion is lower than expected; The competition pattern of the industry has deteriorated.
