\u3000\u3 Guocheng Mining Co.Ltd(000688) 305 Kede Numerical Control Co.Ltd(688305) )
Event: the company announced on April 11 that in 2021, the revenue was 254 million yuan (+ 27.99%), the net profit attributable to the parent company was 73 million yuan (+ 106.81%), the net profit not attributable to the parent company was 26 million yuan (+ 28.25%), the gross profit margin was 43.14% (+ 0.99pcts), and the net profit margin was 28.72% (+ 11.02pcts).
Key investment points:
The business of high-end CNC machine tools continued to develop, and the net profit attributable to the parent doubled
During the reporting period, the company’s operating revenue was 254 million yuan (+ 27.99%), with a compound growth rate of 35.82% in recent five years. In 2021, based on the continuous procurement of high-quality customers in the original aerospace and other fields, the company actively expanded the downstream market, the number of orders increased rapidly and the scale of revenue increased steadily. Net profit attributable to parent company is 73 million yuan (+ 106.81%), net profit attributable to parent company is 26 million yuan (+ 28.25%), which is double that of the same period of last year, mainly due to the government subsidy included in current profit and loss of the company during the reporting period of about 537104 million yuan. The gross profit margin is 43.14% (+ 0.99pcts) and the net profit margin is 28.72% (+ 11.02pcts), both of which remain at a high level, and the net profit margin is significantly higher than that of the previous year, mainly due to the high self-sufficiency rate of the company’s high-grade CNC machine tools, CNC systems and key functional components, obvious advantages on the cost side, and the receipt of subsidy funds after expensed national allocation projects in previous years during the reporting period has offset the R & D expenses of the current period, and the expenses of the period have further decreased, Due to the comprehensive influence of the above factors. The weighted average return on net assets was 10.97% (+ 4.33pcts), and the profitability was further improved.
In terms of products, the company’s main products are high-end CNC machine tools, high-end CNC systems and key functional components. During the reporting period, the operating revenue of high-end CNC machine tools reached 233 million yuan (+ 35.88%), which was mainly due to the acceleration of the company’s marketization process and the expansion of products to precision molds, automobiles, clean energy and many other fields on the basis of ensuring the steady growth of aerospace field, thus driving the further increase of the sales volume of complete machine products; The operating revenue of high-end CNC system is 1.8153 million yuan (- 45.50%), and the operating revenue of key functional components is 5.7415 million yuan (- 43.82%), which is small and declining to a certain extent. It is mainly due to the fact that the CNC system and key functional components independently developed by the company are preferentially equipped with complete machines at this stage, and the external sales volume is small. We believe that in the future, with the continuous expansion of the downstream application fields of the company’s high-end CNC machine tools, the CNC system and key functional components can radiate to more fields, including electric vehicles, machinery, industrial automation, etc., and the revenue scale will grow rapidly. In terms of expenses, the company’s three fee expense rate was 18.93% (- 5.87 PCTs), with a significant decrease, including sales expense rate of 10.41% (+ 0.51 PCTs), management expense rate of 8.59% (- 6.25 PCTs) and financial expense rate of – 0.07%. During the reporting period, the company fully investigated the market demand and actively participated in industrial exhibitions. The market expansion was strengthened, the business development continued to improve, and the sales expense rate increased slightly; Thanks to the continuous improvement of the company’s strategic management efficiency for many years, the management cost has decreased significantly; The availability of raised funds will help the company optimize its capital structure and further reduce its financial expenses.
From the perspective of R & D expenses, the R & D expenses of the company in 2021 were 3.4913 million yuan (- 74.66%), which decreased significantly compared with the previous year, mainly due to the fact that the post subsidy funds received from the expensed state allocated projects in the previous year offset the R & D expenses of the current period. Regardless of the impact of the subsidy funds, the decline of the total R & D expenses (201218 million yuan, – 6.95%) slowed down. From the perspective of R & D investment (including capitalized investment), the R & D investment of the company in 2021 was 775761 million yuan (- 27.60%), accounting for about 30.59% (-23.49 PCTs) of the revenue, which showed a downward trend as a whole. It is mainly due to the fact that after years of high R & D investment, the basic R & D work of the company has been basically completed at this stage. At present, it will mainly focus on the R & D of numerical control system, key functional components and new models, and the overall R & D investment will be more stable than in the early stage.
At the end of the reporting period, the company’s inventory was 301 million yuan (+ 63.67%), of which the relatively large products in process (124 million yuan, + 59.58%) and goods in stock (49 million yuan, + 81.13%) maintained a rapid growth. On the one hand, the company increased sales orders, actively prepared goods and organized production to meet the rapid growth of downstream demand; On the other hand, due to the high self-determination rate of the whole machine, the independent research and development of key functional components and the high self-made rate, the balance of inventory goods is relatively high.
Specialize in the new “little giant” and build the company’s core competitiveness with double R & D system
With the continuous optimization and upgrading of China’s industrial structure, the demand for machine tools as industrial machine tools is increasing. The company’s main products are high-end CNC system products, high-end CNC machine tools and key functional components with independent intellectual property rights and core technology. It is one of the few innovative enterprises in China with dual R & D systems of high-end CNC systems and high-end CNC machine tools. As a specialized and new “little giant” enterprise awarded by the Ministry of industry and information technology, the company has been widely used and in a leading position in national key fields such as aerospace, clean energy and automobile. Downstream customers cover a number of central military enterprises and scientific research institutes including Hangfa group, aviation industry, aerospace science and industry, Aerospace Hi-Tech Holding Group Co.Ltd(000901) and high-quality private enterprises including Wuxi turbine and Wuxi Hyatech Co.Ltd(688510) . During the reporting period, the repurchase rate of the company’s complete machine products reached more than 40%, which further shows that the company’s complete machine products have good synergy with the CNC system, and the product quality has been widely recognized by customers.
In terms of R & D achievements, during the reporting period, the company added 37 patents, including 11 invention patents. At the same time, as one of the major participants in the national science and technology major project “high-end CNC machine tools and basic manufacturing equipment” (special project 04), the company has undertaken 29 related projects and 9 other national projects, including “development and demonstration application of flexible manufacturing unit for precision tool five axis grinding” 11 items including “ultra large aperture optical element ultrasonic grinding and polishing technology and equipment” have passed the national acceptance review.
In addition, in 2021, the core technical team of the company participated in the formulation of 7 national standards and 5 industrial standards. The newly participated national standards include RTCP precision inspection of five axis machining center (gb/t399532021) and S-shaped specimen precision inspection of five axis machining center (gb/t399672021). The latter is a national standard drafted by the aviation industry Chengdu airlines as the first completion unit, This time, the company participated in the standard formulation process of the testing of s-specimen five axis machine tool independently invented and designed by Chengfei, which further confirms that the company has long been committed to the technical breakthrough, design innovation, fine manufacturing and standard formulation of five axis linkage CNC machine tools, high-end CNC systems and key functional components, has formed the core technology with independent intellectual property rights, and further established the company’s leading position in China’s high-end machine tool manufacturing industry.
Thanks to the complete underlying technical support, the company has strong synergy from the integration of numerical control system, key functional components to the whole machine, and can realize the rapid iterative upgrading of products. In terms of new product R & D and reserve, in addition to the five new products under research mentioned in the annual report, the company expects to display six new models at ccmt2022 machine tool exhibition this year, including 800 series new models of five axis vertical machining center A new generation of compact Dechuang machine tools, large turn milling compound machining center, five axis horizontal machining products of KD Series 800 worktops and large five axis flap milling machining center. Among them, the large five axis flap milling machining center has been connected with a main engine factory in China and is now in the process verification stage.
The advantages of aerospace technology are gradually emerging, and the development of new business is remarkable
Five axis CNC machine tool is the only solution for complex surface machining, and it is also a necessary manufacturing equipment in the fields of aerospace and military industry. In the field of aerospace, the company has formed a series of core technologies and core products in its related five axis linkage CNC machine tools, CNC systems and key functional components, which can meet the processing and manufacturing of key parts such as aerospace engine impeller, blade and gearbox / complex structural parts such as long shaft, disk and sleeve / large structural parts and wall panels. In terms of specific products and models sold, the company mainly makes customized design according to customers’ differentiated needs on the basis of general platform, so the type of equipment sold at present is mainly general equipment; In terms of special equipment, at this stage, it is mainly the five axis blade machine and the five axis flap milling processing center to be put into operation.
In terms of new business, with the increasing demand for high-precision, efficient and multi task processing mode from downstream customers, including Hangfa group and supporting private enterprises in the aerospace field, the company has carried out flexible automatic production line business, taking high-end CNC machine tools as the core, integrating fixture and tool schemes, cooperating with automatic logistics and storage systems, and relying on computer control, combining a variety of production modes. During the reporting period, the company signed four flexible automation production line contracts (with a total amount of 31.175 million yuan). The orders are mainly in the aerospace field. One production line has been delivered in the fourth quarter of 2021, and the other three production lines are expected to be delivered this year.
On the whole, the company’s leading technology, outstanding price advantage and increasingly prominent brand effect in the aerospace field. In terms of hand orders, the proportion of new aerospace orders of the company in the whole year of 2021 and from January to February of 2022 was 47% / 60% respectively. In the future, with the promotion of mass manufacturing process in the aerospace field, the demand for five axis linkage CNC machine tools will continue to grow. At the same time, the company also carries out relevant technology research and development and application verification for aircraft structural parts, landing gear and aero-engine upgrading products, so as to further expand the depth and breadth of products and promote the steady increase of the company’s market share in the aerospace field.
Multi-point flowering in the civil field to create a new growth point of the company
At this stage, more and more civil industries begin to turn to five axis processing technology based on the needs of high speed and precision, process compounding, high efficiency, stable production and intelligence. Under this background, the company relies on Dechuang series products to enter the field of civil products, actively expand the downstream new industrial application market, and gradually make efforts in the fields of new energy vehicles, energy and electricity, engineering machinery, cutting tools and so on. In terms of orders on hand, the company accounted for more than 50% of new orders in non aerospace fields in 2021, and has achieved zero breakthrough in semiconductor wafer thinning machines, environmental protection equipment and other fields during the reporting period.
In terms of specific cases, in the field of wind power, the typical customer of the company in this field is Yinchuan Weili transmission. Yinchuan Weili transmission introduces the company’s eight five axis milling compound centers, with a total equipment of 126942 million yuan, which is used for the processing of wind power reducer shell. Through the application of the company’s equipment, Yinchuan Weili realized multi process integrated production, increased the production capacity to more than three times the original, and reduced the personnel to 1 / 3 of the original, which further reduced the operating cost while improving the production efficiency.
Fund raising projects have been steadily promoted, and multiple forces have driven the rapid increase of production capacity
In terms of raised investment projects, it is oriented to the engineering project to improve the industrialization capacity of aerospace high-end five axis CNC machine tools, with a total investment of 462 million yuan and a construction period of 3 years. After the completion of the project, it is estimated that a total of 503 sets of annual production capacity will be added (the existing annual production capacity is about 158 sets, + 218.35%), with an additional annual revenue of 768 million yuan and a net profit of 157 million yuan.
According to the public information, the company plans to achieve the production capacity target of 500 five axis CNC machine tools per year by the end of the 14th five year plan according to the production expansion rhythm of adding 100 new production capacity per year. In the short term, the planned capacity of the company from 2021 to 2022 is 150200 units / 250300 units respectively, and the actual production and warehousing of 158 units (+ 56.4%) in 2021 has completed the set target.
From the perspective of production expansion construction, the five axis linkage CNC machine tools produced by the company have a high degree of autonomy and a long product chain. The relevant functional components need to be expanded simultaneously in order to meet the release of overall production capacity. In view of the above problems, the company expanded the plant area from 10000 square meters to 40000 square meters during the reporting period. At the same time, through: ① outsourcing SMT Mounter production line Equipment such as motor automation production line and self built five axis vertical machining and gantry machining center equipment to strengthen the machining and manufacturing capacity of functional parts; ② Introduce motor automation production line and Yinchuan motorized spindle production base to realize synchronous production expansion of key functional components; ③ Sort out outsourcing resources in Shandong, Shenyang and other places, and cooperate with the company’s production expansion plan. All parties make concerted efforts to lay a solid foundation for the steady improvement of the company’s production capacity.
In general, the company will continue to upgrade its existing products in the fields of aerospace, national defense and military industry, form a multi specification layout, and actively layout and expand production to meet the rapidly growing demand of the downstream market. We believe that with the rapid increase in the downstream demand of the military industry led by aerospace and the demand for import substitution during the 14th Five Year Plan period, the company is expected to deepen the binding of existing customers and actively explore new customers, so as to stabilize the stock and ensure the increment, and further improve the company’s ability to face the industrialization of aerospace high-end five axis CNC machine tools.
Investment advice
We believe that:
① at present, the purchase of five axis machine tools by Chinese users is still dominated by import, and China’s five axis machine tool industry urgently needs to solve the problem of import substitution. As a specialized and new “little giant” enterprise awarded by the Ministry of industry and information technology, the company’s products have been widely used in national key fields such as aerospace, clean energy and automobile, and are in a leading position in technology. Some products have entered the “supply catalogue of domestic high-grade CNC machine tools in military industry” to realize batch import substitution;
② in the field of aerospace, five axis linkage CNC machine tool is the only solution for complex surface machining, and it is also a necessary manufacturing equipment in the field of aerospace and military industry. The company has formed a series of core technologies and core products in its related five axis linkage CNC machine tools, CNC systems and key functional components. At the same time, it has actively carried out new businesses such as flexible automation production line, further expanded the depth and breadth of products, and promoted the steady increase of the company’s market share in the aerospace field;
③ relying on Dechuang series products, the company cuts into the field of civil products, actively expands the application market of downstream new industries, and gradually makes efforts in the fields of new energy vehicles, energy and electricity, engineering machinery, cutting tools and so on. The civil products business blooms in many points and is expected to become a new business growth point.
Based on the above point of view, we expect the operating revenue of the company from 2022 to 2024 to be 407 million yuan and 570 million yuan respectively
