\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 84 Zhejiang Jw Precision Machinery Co.Ltd(300984) )
Company research temsector
The performance in 2021 was in line with expectations: the annual revenue increased by 61% year-on-year, and the net profit increased by 9% year-on-year
In 2021, the company achieved revenue of about 900 million yuan, a year-on-year increase of about 61%, net profit of about 62.88 million yuan, a year-on-year increase of about 9%, deduction of non net profit of about 52.92 million yuan, a year-on-year increase of about 4%, and the performance basically met the expectations. Q4 achieved revenue of about 250 million yuan (+ 46%) in 2021; The net profit was 15.67 million yuan (- 27%); The gross profit margin and net profit margin of Q4 were 9.2% and 6.1% respectively, with a year-on-year decrease of 13pct and 6.2pct. It is estimated that the decline of Q4 profitability is mainly related to the large investment in the early stage of the heat treatment line and the plant relocation of the subsidiary jianwo Seiko in the fourth quarter.
Revenue side: Schaeffler ranks first, accounting for 54%; Japanese customers accelerated their breakthrough and doubled year-on-year growth
In 2021, the company’s bearing ring revenue was 850 million yuan, a year-on-year increase of 59%. Among them, Schaeffler contributed 480 million yuan, a year-on-year increase of 52%, accounting for 54%; Japanese customers enske, jetteggert and ntien contributed 150 million yuan, 62.52 million yuan and 19.12 million yuan respectively, with a year-on-year increase of 94%, 147% and 94% respectively. The total income of Japanese customers was 26%, with a year-on-year increase of 5pct.
Profit side: the profitability is disturbed by multiple factors in the short term, and the production capacity will gradually recover with the pre investment
In 2021, the gross profit margin of the company was 15.7% and the net profit margin was 7%, with a year-on-year decrease of 5.7pct and 3.4pct respectively. Because: 1) price rise of raw materials: there is a lag in transferring cost pressure to downstream customers. In 2021, direct materials increased by 68% year-on-year; 2) Capital expenditure front: by the end of 2021, the company’s employees had a year-on-year increase of 76%; Direct labor increased by 74% year-on-year; Fixed assets increased by 121% year-on-year, and manufacturing expenses increased by 64% year-on-year; 3) Transportation expenses are transferred from sales expenses to operating costs; 4) Yinchuan subsidiary still has a loss of 3.17 million yuan in 2021 due to its capacity climbing stage. With the continuous investment of pre invested capacity and the rise of per capita output value, the profitability of the company will gradually recover.
It is proposed to issue convertible bonds to raise investment in high-speed forging and heat treatment capacity, make up for the shortcomings of the industrial chain and improve profitability
It is proposed to issue 310 million yuan of convertible bonds for high-speed forging intelligent manufacturing project and bearing ring heat treatment production line project. The issuance of convertible bonds will give priority to the placement to the original shareholders. Supplement the capacity of high-speed forgings and heat treatment: 1) help the company to undertake more types of orders from customers; 2) Changing from outsourcing or outsourcing to independent production can improve profitability.
The growth path is clear: the market share and profitability are both improved, and we are moving forward to the world’s first-class bearing ring manufacturer
Growth path: 1) increase market share: develop new customers, follow old customers to expand production across regions, and improve product coverage; 2) Profitability improvement: it extends forward to forging processing and backward to heat treatment and fine grinding processes. The net profit margin will be 6-7pct increased at most in the future, which is expected to reach more than 15%.
Profit forecast and valuation
It is estimated that the revenue from 2022 to 2024 will be 1.3/19/2.5 billion yuan, with a year-on-year increase of 50% / 40% / 32%, and the net profit attributable to the parent company will be 130 / 2.1/320 million yuan, with a year-on-year increase of 110% / 60% / 52%, corresponding to pe20 / 12 / 8 times. Maintain buy rating.
Risk tips: 1) risk of raw material price change; 2) Covid-19 epidemic situation continues to deteriorate risk;
