\u3000\u3 China Vanke Co.Ltd(000002) 149 Western Metal Materials Co.Ltd(002149) )
Event: the company announced on April 14 that in 2021, the revenue was 2.395 billion yuan (+ 18.00%), the net profit attributable to the parent company was 133 million yuan (+ 67.55%), the net profit not attributable to the parent company was 105 million yuan (+ 141.21%), the gross profit margin was 23.05% (+ 1.87 PCTs), and the net profit margin was 7.33% (+ 1.22 PCTs).
Key investment points:
"Building a world leading rare metal material processing base": the company is a leader in China's rare metal new material industry. Relying on the scientific research strength of the controlling shareholder Northwest Nonferrous Metals Research Institute, the company has formed titanium and titanium alloy processing materials, layered metal composites, rare and precious metal materials, metal fibers and products, rare metal equipment, tungsten molybdenum materials and products Titanium products are mainly used in military industry, nuclear power, environmental protection, marine engineering, petrochemical, electric power and other industries and many national large-scale projects. In the "14th five year plan" and medium and long-term development plan, the company has defined the development orientation of a diversified cluster with titanium industry as the main body, composite materials, rare and precious materials and filter materials industry as an important part, and the coordinated development of other industries.
Aerospace demand has helped the company achieve new breakthroughs in high-quality development: in 2021, the company's revenue increased by 18.00% year-on-year, the net profit attributable to the parent company increased by 67.55%, and the company's gross profit margin (23.05%, + 1.87 PCTs) and net profit margin (7.33%, + 1.22 PCTs) increased rapidly. Among them, the gross profit margin reached a record high, mainly benefiting from the acceleration of military modernization and the upgrading of national defense equipment, and the rapid growth of titanium products with strong profitability in the aerospace field, The proportion of revenue in high-end application field has increased significantly. The company's annual sales revenue in aerospace field reached 730 million yuan (+ 35%, accounting for 30% of revenue, + 4pcts). The main subsidiary of titanium products of the company, Western titanium (88.30%) achieved a revenue of 1.315 billion yuan (+29.61%) in 2021, and a substantial increase in net profit of 103million yuan (+118.56%).
The three rates are basically the same, and the construction of digital platform is expected to improve efficiency: the three rates of the company (10.15%, + 0.07pcts) are basically the same in 2021. Specifically, the sales expenses increased by 32 million yuan (+ 32.62%), mainly due to the increase of insurance expenses this year (insurance premium and freight and miscellaneous expenses of 6.04 million yuan, + 1077%); Management expenses increased by 161 million yuan (+ 25.82%), mainly due to the increase of employee compensation expenses (125 million yuan, + 34%). The company strengthened comprehensive budget management, implemented refined management of production process and improved management efficiency. At present, the company has completed the construction of phase I of digital platform, and the ability of data integration and analysis has been significantly improved; The second phase of MES system construction of digital platform under implementation is to implement MES system and improve the level of production and manufacturing management with Western titanium industry, Sinochem and field as pilot; Improve the BI system and improve the ability of data analysis and application.
Contract liabilities increased and inventories increased: the company's contract liabilities were 159 million yuan (compared with the beginning of the period + 41.91%), reflecting the rapid growth of downstream demand to some extent. Meanwhile, the company's inventories were 1.527 billion yuan (compared with the beginning of the period + 8.99%), including 401 million yuan of raw materials (compared with the beginning of the period + 14.82%), 740 million yuan of products in process (compared with the beginning of the period + 6.23%) and 359 million yuan of goods in inventory (compared with the beginning of the period + 19.09%). It indicates that the company's production scale continues to expand steadily, providing support for the release of the company's performance in the future.
Continue to increase R & D investment and bring new growth points to the company: in 2021, the company invested 120 million yuan (+ 29.67%). Continue to increase the cultivation and development of new products and Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) and realize batch production of some products. It mainly includes: ① the preparation technology of titanium alloy sheet for aerospace is optimized to greatly improve the production efficiency; ② The industrial preparation of high-performance and low-cost titanium alloy sector for armor was realized; ③ Development of zirconium steel double-layer composite technology to realize product export; ④ The production, preparation and continuous welding technology of corrosion-resistant alloy mesh filter bag in the field of high-temperature flue gas dust removal have been overcome; ⑤ The batch production of large-scale medium thickness niobium tungsten alloy sectors was completed for the first time; ⑥ The multi-layer composite target of refractory metal was successfully delivered to practical samples, the basic development of heat sink material molybdenum alloy was completed, and the test performance was good; ⑦ High strength and tough titanium alloy tubes with a length of more than 20 meters were prepared for oil and gas opening; ⑧ The in-situ synthesis technology of ultrafine silver quantum dots embedded on the surface of micro particles was developed; ⑨ A preliminary exploration was made in the trial production of pure titanium strip for bipolar sector of hydrogen fuel cell; ⑩ Strengthen the technical development of titanium alloy profile and shell, diaphragm valve / pressure reducing valve and other valve precision parts, and form a relatively perfect production and preparation process.
Make up for the shortage of production capacity and steadily promote the construction of raised investment projects: in order to meet the urgent demand for high-performance and low-cost titanium alloy sectors in China's aerospace, ship, marine engineering, weapons and other industries, during the reporting period, the company issued non-public shares (at an issue price of 12.50 yuan / share) to promote the construction of the raised investment project "technical transformation project of high-performance and low-cost titanium alloy production line", which is expected to increase the production capacity of 3000 tons of titanium military products, The project has a budget of 485 million yuan and has been started in March 2021. However, due to the impact of the epidemic situation in the second half of 2021 and other factors, some infrastructure construction and equipment installation and commissioning of the new plant have been delayed, and it is expected to be put into operation in the second quarter of 2022.
Promote the listing and capital increase of subsidiaries: in order to further improve the corporate governance structure, promote the rapid development of holding subsidiaries and expand financing channels, the company completed the holding subsidiary Tianli company in the first half of 2021 (holding 51.3%, 2021 revenue of 505 million yuan and net profit of 43 million yuan) Xinuo company (holding 60.0%, 2021 income of 247 million yuan, net profit of 31 million yuan) and filt company (holding 51.2%, 2021 income of 109 million yuan, net profit of 18 million yuan) were listed on the new third board. Tianli company and filt company entered the innovation layer in June 2021, improved the corporate governance structure, and achieved great growth in shareholder returns; In addition, the company completed the capital increase and share expansion of Tianli company (9 million shares, raising funds of 40.05 million yuan) and filt company (3.45 million shares, raising funds of 1991 million yuan). And actively promote the capital and share increase of Sinochem, which is expected to be completed by the end of May 2022.
Investment suggestion: with the increasing demand for aerospace titanium materials, the company's military products business is expected to be rapidly improved, and the product structure is continuously optimized and upgraded. At the same time, the company will step up the construction of production capacity and open the upper limit of military titanium production capacity. The company's profit scale will be rapidly expanded, the superposition of scale effect and the improvement of the company's management efficiency, and the company's profit quality will also be significantly improved. We estimate that the company's operating revenue from 2022 to 2024 will be 3.120 billion yuan, 3.909 billion yuan and 4.540 billion yuan respectively, the net profit attributable to the parent company will be 222 million yuan, 331 million yuan and 455 million yuan respectively, and the EPS will be 0.45 yuan, 0.68 yuan and 0.91 yuan respectively. We maintain the "buy" rating with a target price of 18.50 yuan, corresponding to 41 times, 27 times and 20 times of the predicted EPS from 2022 to 2024.
Risk tip: the raised investment construction is less than expected, the price of raw materials rises, and the prosperity of the industry decreases.
