\u3000\u3 Guocheng Mining Co.Ltd(000688) 186 Zhangjiagang Guangda Special Material Co.Ltd(688186) )
Core view
The company released its 2021 annual report, and achieved a revenue of 2.74 billion yuan, a year-on-year increase of 51.2%; The net profit attributable to the parent company was 176 million yuan, a year-on-year increase of 1.7%, and the basic earnings per share was 0.95 yuan / share, a year-on-year decrease of 13.6%; The weighted roe was 7.6%, down 3.9pct from last year. It is proposed to pay a dividend of 0.25 yuan per share, with a dividend rate of 30.4%.
The scale of the company expanded rapidly and the added value of products continued to increase. Benefiting from the release of wind power casting capacity and the merger of steel casting business, the company’s revenue scale expanded rapidly, with a year-on-year increase of 51.2%, and led to a further increase in the proportion of high-end equipment business, from 41% in 20 years to 59% in 21 years.
The cost price is under pressure at both ends, and the profitability has declined. During the reporting period, the company’s main raw materials such as pig iron and scrap increased significantly, while the decline of onshore wind power put pressure on the price of the company’s products, resulting in a decline in the net interest rate in 21 years, from 9.6% in 20 years to 6.4%, and the growth rate of the company’s net profit attributable to the parent was only 1.7%.
R & D expenses increased by 75.2% year-on-year, promoting product transformation and upgrading. In 21 years, the company was selected as a national specialized and new “little giant”. During the reporting period, the company obtained 8 invention patents and 11 utility model patents. The R & D investment was up to 130 million, with a year-on-year increase of 75.2%. The R & D cost rate increased from 4.1% in 20 years to 4.8%. During this period, 18 research projects were added, mainly involving the field of new energy wind power and energy power equipment.
The revenue is expected to continue high growth in 22 years, and the profitability is expected to improve. With the continuous release of the technological transformation capacity of phase II castings and steel castings, the scale of the company in 22 years is expected to continue high growth. On the profit side, although the price of raw materials was still high in the first quarter of 22 years, it was relatively stable. With the recovery of onshore wind power installation, the selling price of small MW castings is expected to rise, driving the improvement of the company’s profit. In addition, the company’s large-scale gearbox finishing project has started construction in October 21, and the production line may be put into trial operation in the second half of 22 years, and has become a new profit growth point of the company in 23 years.
Profit and investment forecast
As the price of the company’s main raw materials is still at a high level, we lowered the assumption of the company’s gross profit margin. After adjustment, the company’s EPS in 20222024 was 1.632463.45 yuan (compared with 2.00 and 2.88 yuan in 20222023). According to the valuation of 22xpe of the comparable company in 2022, the buy rating is maintained, and the target price is 35.78 yuan.
Risk tips
The risk of intensified competition in the large megawatt casting Market of wind power, the risk that the large-scale process of wind power is less than expected, the risk that the product development or customer expansion of gearbox precision parts is less than expected, the risk that the demand for large steel castings is less than expected, the risk of fluctuations in raw material prices, and the risk of repeated global epidemics.
