\u3000\u3 Shengda Resources Co.Ltd(000603) 915 Jiangsu Guomao Reducer Co.Ltd(603915) )
After 30 years of deep cultivation in the field of general reducer, the company’s performance has grown steadily
Jiangsu Guomao Reducer Co.Ltd(603915) has been deeply engaged in the field of general reducer for nearly 30 years, and has established a deep technical reserve and perfect sales system with complete product categories and leading market share in the industry. The general reducer has a wide range of downstream applications, and the demand change of a single industry has little impact on the overall demand, reflecting the growth attribute of the company’s steady development through the cycle. In recent years, the company’s performance has maintained steady growth. From 2016 to 2020, the revenue CAGR was 17.36%, the net profit attributable to the parent CAGR was 38.83%, and the profitability maintained high growth.
The reducer Market exceeds 100 billion, and the import substitution is just in time
In 2022, China’s Reducer Market will exceed 130 billion yuan, with a large market space, of which the general reducer market accounts for about 40%. Overseas manufacturers have the first mover advantage in the field of reducer. In recent years, the technical R & D level of domestic manufacturers has gradually increased. The gap between the product performance of Chinese head reducer manufacturers such as Jiangsu Guomao Reducer Co.Ltd(603915) and overseas manufacturers is becoming smaller and smaller. The product cost performance is better than that of foreign capital and provides perfect after-sales service. The process of domestic substitution continues to accelerate. In addition, with the improvement of downstream customers’ requirements for reducer products and the tightening of environmental protection policies, small and medium-sized enterprises will be gradually eliminated due to their weak strength, and the market share will be further closer to the head.
The construction machinery business continues to expand, and the high-end reducer business can be expected in large quantities
Taking the tower crane market as the entry point, the company entered the special reducer Market for construction machinery, and realized the batch shipment of GLW series rotary reducers in 2020. Since 2021, the company has continued to expand new customers, among which Henan Dongqi machinery has become the company’s major direct sales customer from the initial small batch supply. It is expected that the company will make breakthroughs in the fields of aerial work platform, forklift, excavator, cement mixer and so on in the future. Through the acquisition of Changzhou lexno, the company began to expand the high-end market with the “gnord” brand. “Gnord” brand is mainly used in new energy, pharmaceutical, rubber and plastic, chemical and other fields, of which the reducer for lithium battery accounts for 40% – 50%. With the gradual implementation of the capacity of 90000 high-end reducers and the high boom of new energy vehicles, the company’s high-end reducer business will usher in high-speed growth in the future.
Investment advice and profit forecast
The company is a leader in China’s general reducer industry. On the basis of consolidating the middle-end market and hunting the low-end market, the company has gradually expanded the high-end and special reducer Market with a clear growth path. With the implementation of raised investment projects and high-end reducer projects, the company’s performance will continue to maintain high growth. We expect that from 2021 to 2023, the company’s revenue will be RMB 2.928/37.95/4.897 billion respectively, and the net profit attributable to the parent company will be RMB 488/6.40/840 million. The current share price corresponds to EPS of 1.03/1.35/1.78 yuan and PE of 28.5/21.7/16.5 times. It is rated as “buy” for the first time.
Risk tips
The price of raw materials has risen, the release of production capacity is less than expected, the macro-economy has declined, and the market competition pattern has deteriorated.
