\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 99 Weihai Guangwei Composites Co.Ltd(300699) )
Event: the company released its 2021 annual report on April 12. In 2021, it achieved a revenue of 2.607 billion yuan (+ 23.25%), a net profit attributable to the parent company of 758 million yuan (+ 18.18%), a gross profit margin of 44.42% (- 4.81 PCTs) and a net profit margin of 29.00% (- 1.28 PCTs).
Key investment points:
Main supplier of military carbon fiber: the company is the first private enterprise in China to implement the localization of carbon fiber. With carbon fiber as the core and the upstream and downstream of carbon fiber composite industry chain as the main line, the company develops a domestic carbon fiber industry chain led by military, breaks the monopoly of western countries and provides strong guarantee for China’s national defense equipment. It is the main supplier of carbon fiber in China’s aerospace field. The company actively develops civil carbon fiber products, and implements the development strategy of “military civilian integration of military and civilian products that integrate the military with the people, give priority to military products, share military and civilian products, support the military with the people, and interact with military and civilian products”.
The performance has been steadily improved and the profitability has been steadily enhanced: in 2021, the company’s revenue increased by 23.25% year-on-year, the net profit attributable to the parent increased by 18.18%, the company’s roe (diluted) was 18.29% (+ 0.64pcts), and the performance continued to reach a new high. Under the influence of product price reduction in 2021, the company’s net profit and net profit after non deduction have maintained stable growth. The incremental profit in the company’s five business segments mainly comes from the addition of other non stereotyped carbon fiber businesses, prepregs and composites. Specific business:
\u3000\u30001. Carbon fiber and fabric: in 2021, the revenue will be 1.275 billion yuan (+ 18.32%), and the gross profit margin will be 70.05% (- 5.11 PCTs). This year, the company in this sector is divided into set fiber (mainly T300 grade, with revenue of 903 million yuan, accounting for 71% and gross profit margin of 82.69%) and non set fiber (mainly T700 series, T800 series and MJ series, with revenue of 372 million yuan, accounting for 29% and gross profit margin of 39.36%). The pressure on the overall gross profit margin of this sector in 2021 is mainly due to the reduction of mass production of set carbon fiber and the increase of the contribution proportion of non set fiber with low gross profit margin. The new amorphous fiber business has contributed a large profit increment this year, and its contribution to performance growth has reached 70.33%. Although the product price of mass production finalized carbon fiber business decreased, due to the increase of business scale, the profitability or contribution to profit formation remained basically stable, and the contribution to performance growth was 0.91%. We believe that with the batch production and delivery of new amorphous fibers in the future, it is expected to drive the sales of new carbon fibers and become a new growth driving force of the company.
\u3000\u30002. Carbon beam: in 2021, the revenue was 808 million yuan (+ 12.56%), the gross profit margin was 15.07% (- 5.49 PCTs), and the contribution to performance growth was – 22.09%. The carbon beam business was affected by the tight supply of carbon fiber, the main raw material in the first half of the year, the rising price and the epidemic, the delivery of product orders was insufficient, the profitability of products decreased, and the gross profit margin decreased to 11% in 2021h1. In the second half of the year, the company further strengthened its industrial chain management, improved its profitability to a certain extent and recovered its gross profit margin. Subsequently, with the easing of the pressure of price rise, the company’s business profits in this sector will continue to recover.
\u3000\u30003. The gross profit rate of TS immersion is expected to increase by 2694.1% to the performance of TS immersion in 2021 (+ 1.59%) and the gross profit rate is expected to be 2694.1% to the performance of TS immersion in 2021. In 2021, the company’s prepreg expanded smoothly in the field of wind power, and successfully developed carbon fiber semi prepreg suitable for wind power blade manufacturing, which has become the main source of business income growth of prepreg sector; At the same time, through the adjustment of industrial structure, the company actively expands the high-end prepreg products in the fields of aviation, aerospace, weapons, electronics, shipbuilding and so on, and the proportion of high value-added products continues to increase.
\u3000\u30004. Composite materials: in 2021, the revenue was 96 million yuan (+ 141.00%), the gross profit margin was 23.17%, and the contribution to performance growth was 17.75%. With the first and second phases of the company’s advanced composite center being put into use one after another, business development and capacity-building have also made rapid progress. The rapid growth of the company’s composite revenue is mainly due to the successful development of the company’s multiple UAV composite structures and aviation composite components. At the same time, it also drives the company’s business to extend to downstream application fields. The company has obtained the supplier qualification of some parts and components of many aviation main engine factories, In order to improve the scope and depth of cooperation between the company and the main engine factory, a good start has been made.
\u3000\u30005. Guangwei precision machinery: in 2021, the revenue was 48 million yuan (+ 60.46%), the gross profit margin was 21.85%, and the contribution to performance growth was 1.57%. Aiming at the high-end aviation market, Guangwei precision machine focuses on the research and development of various fiber winding equipment, automatic wire and tape laying equipment and ground support equipment. The “high efficiency and high flexibility large CNC wire laying system” developed by the company won the first prize in the first intelligent manufacturing competition of new material industry in Shandong Province. The two carbon fiber equipment industry standards of high temperature carbonization furnace technology for carbon fiber dimension production and graphitization furnace technology for high modulus carbon fiber dimension production drafted by the company were approved by the Ministry of industry and information technology of the people’s Republic of China, and the first set of “double station automatic wire laying machine” developed for composite material sector, And passed COMAC’s performance appraisal of domestic wire laying machine.
The operating efficiency of the company continued to increase: while the overall operating performance of the company increased steadily, the three fee rates (4.69%, -1.84pcts) decreased significantly. Specifically, the management expenses (95 million yuan, + 5.93%) increased and remained basically stable; Sales expenses (17 million yuan, – 7.64%) fell, mainly due to the sharp decline in advertising expenses of the company (401500 yuan, – 81%); The decrease in financial expenses (RMB 10 million, – 44.39%) was mainly due to the year-on-year decrease of 520 million in non recourse factoring and discounting; The R & D expenses (RMB 232 million, – 15.25%) decreased, mainly because the carbon fiber development task of t800h project has been basically completed and the M40J project has been concluded.
The company’s inventory is 412 million yuan (compared with the beginning of the period + 43.88%), mainly due to the increase of production materials and finished products, including 185 million yuan of raw materials (compared with the beginning of the period + 43.24%), 47 million yuan of products in process (compared with the beginning of the period + 75.28%) and 137 million yuan of goods in stock (compared with the beginning of the period + 25.79%), which will increase the performance in the future.
The epidemic superimposed the impact of price reduction, and the performance of 2022q1 was under pressure: the company announced the performance forecast of 2022q1, realizing a revenue of 591 million yuan (- 5.46%) and a net profit attributable to the parent company of 207 million yuan (- 5.37%). It is mainly due to the year-on-year decline in the price of finalized carbon fiber products supplied in bulk, which affects the profitability of the product; As well as the impact of the epidemic, some business sectors stopped production and logistics were interrupted, affecting production and product delivery. Specifically, the revenue of carbon fiber (including fabric) business was 384 million yuan, with a year-on-year increase of about 7%; The revenue of wind power carbon beam business was 141 million yuan, with a year-on-year increase of about 2%; The prepreg business realized a revenue of 48 million yuan, down about 56% year-on-year due to the end of the phased order of wind power prepreg, which contributed a lot in the same period of last year.
The raised investment project was put into operation and the production capacity began to release: in 2021, the company’s carbon fiber design capacity reached 2655 tons (+ 43%, 5030 tons under construction), carbon beam capacity reached 10.2 million meters (+ 20%, 1.7 million meters under construction), and prepreg capacity reached 13.75 million square meters (flat, 850000 square meters under construction).
Continuous capacity construction of the company:
① the IPO raised and invested projects “high strength and high model carbon fiber industrialization project” and “military civilian integration high strength carbon fiber efficient preparation technology industrialization project” will be completed in 2021 and reach the expected investment goal;
② complete the equivalence verification of the precursor capacity reconstruction of a finalized carbon fiber product in different places, so as to increase the carbon fiber capacity of the production line of this model to about 500 tons per year;
③ in 2021, the company will use its own funds to build and reconstruct two carbon fiber production lines. One is to build a multi-functional carbon fiber production line with an annual output of 30 tons of qm4035 / qm4050, so as to meet the rapid growth of Changzheng Engineering Co.Ltd(603698) and high-end civil products’ demand for high-strength and high modulus carbon fiber applications. Second, through technological transformation, a new 1000 ton industrialized production line is formed on the basis of the original experimental line, which is used for the production of wet process 800 / 700 and other products, so as to make capacity reserves for the application needs or potential orders of the two products in the downstream aviation equipment field. It is planned to be built within 2022;
④ Inner Mongolia Guangwei low-cost carbon fiber project (planned 10000 tons), with a capacity of 4000 tons under construction in phase I, is expected to be completed and put into operation in 2022. The company has adjusted the purpose of the project. The original intention of the project is to provide carbon fiber raw material guarantee for the company’s carbon beam business, while taking into account the growth expectation of the civil market. In the future, the Inner Mongolia Guangwei project of the company will form a product structure with coexistence of products with various tow specifications and matching of high and low ends, and make necessary adjustments with the change of market environment.
⑤ in terms of carbon beam capacity, the company continued to steadily promote the construction of carbon beam capacity as planned, completed 10 carbon beam production lines with an annual output of 1.7 million meters, and added 10 carbon beam capacity construction projects with an annual output of 1.7 million meters. After completion, the company will have 70 carbon beam production lines with an annual output of 11.9 million meters, so as to reserve necessary and reasonable capacity for the incremental wind power market formed by China’s main engine plants based on carbon beam technology.
⑥ in terms of advanced composite material R & D center, in 2021, the construction of phase II of the advanced composite material R & D center invested by the company with its own funds was basically completed. The advanced composite material center has basically formed a scientific research and production line of autoclave process and supporting high-end composite material business with phase I R & D center as the main body, and a batch production line of molded profiles, pipes, UAVs and other businesses with phase II plant as the main body.
The whole industry chain layout adheres to the “two high and one low” carbon fiber development strategy: the company is committed to becoming a carbon fiber whole industry chain production enterprise. In 2021, the company plans to undertake the production and assembly of various composite materials and the R & D and vertical layout of various high-end precision instruments. At present, the prototype of the whole industry chain of the company has been formed. The layout of the whole industrial chain of the company is conducive to the rapid development of systematic research, timely acquisition of evaluation and feedback information, and the formation of comprehensive technical capabilities in the digestion and absorption of core technologies, application and development of new products, maturity and stability of processes, tracking and feedback of product quality, equipment support, etc; The company adheres to the “two high and one low” carbon fiber development strategy of high strength, high modulus and low cost, closely follows the international frontier and national needs, and forms a series and diversified carbon fiber products.
Investment suggestion: as the main supplier of carbon fiber in China’s aerospace field, the company is currently in the transition period of alternation of new and old products. In the future, the company’s dependence on a single product or a single field will be gradually reduced, and the diversification of products and businesses will lay a solid foundation for the stable growth of the company. At the same time, the company continues to do a good job in the overall strategic layout of the industrial chain, grab key markets and continuously extend to the downstream and civilian products. In addition, the completion of the raised investment project and the future implementation of Baotou project will open the company’s production capacity ceiling. We estimate that the company’s operating revenue from 2022 to 2024 will be 3.297 billion yuan, 4.094 billion yuan and 5.052 billion yuan respectively, the net profit attributable to the parent company will be 972 million yuan, 1.178 billion yuan and 1.428 billion yuan respectively, and the EPS will be 188 yuan, 2.27 yuan and 2.76 yuan respectively. We maintain the “buy” rating with a target price of 70 yuan, corresponding to 37 times, 31 times and 25 times of the predicted EPS from 2022 to 2024.
Risk tip: the production capacity is not smooth, the price of raw materials rises, and the progress of technology research and development is less than expected.
