\u3000\u3 Guocheng Mining Co.Ltd(000688) 257 Shareate Tools Ltd(688257) )
The performance in 2021 is mainly affected by non recurring factors
In 2021, the company achieved a revenue of 890 million yuan (year-on-year + 22.6%), a net profit attributable to the parent company of 140 million yuan (year-on-year + 19.7%), and a net profit attributable to the parent company of 122 million yuan (year-on-year + 11.0%). Among them, Q4's single quarter revenue was 227 million yuan (year-on-year + 12.3%), the net profit attributable to the parent was 34.29 million yuan (year-on-year + 4.6%), and the net profit attributable to the parent after deduction was 24.69 million yuan. We judge that the main reasons are: (1) 2021q4 company relocated the cemented carbide production capacity, superimposed power restriction and other factors, and the actual shipment is slightly lower than expected. (2) 2021q4 exchange rate fluctuates greatly, which has a great impact on the profit margin of overseas business; At present, the company's product prices have increased accordingly in terms of exchange rate changes, so we judge that the impact of exchange rate on the company's profit margin will be significantly reduced in 2022. (3) 2021q4 company achieved IPO listing, which had an impact on relevant issuance expenses.
By business, the cemented carbide business revenue was 310 million yuan (year-on-year + 29.2%), and the corresponding sales volume was + 21% year-on-year; The business income of cemented carbide tools was 340 million yuan (year-on-year + 10.7%), and the sales of 29000 sets of cone bits, the main product, was + 16.5% year-on-year. The revenue growth was less than the sales growth, mainly due to the change of product structure (i.e. the proportion of infrastructure cone bits increased, and the unit price was lower than mine cone bits) and the appreciation of RMB exchange rate, resulting in the decline of the average selling price of overseas products; The revenue of supporting products was 230 million yuan (year-on-year + 30%), and exploration products such as hole expander and diamond coring bit increased significantly.
Under the price rise of raw materials + exchange rate fluctuation, the gross profit margin is under pressure in the short term, and the expense rate decreases slightly during the period
In 2021, the gross profit margin was 36.8% (year-on-year - 2.8pct), of which the gross profit margin of cemented carbide and cemented carbide tools business was 30.2% / 47.0%, respectively - 0.7pct / - 3.8pct year-on-year. The decline in gross profit margin is mainly due to the continuous rise in the price of raw materials such as tungsten carbide in 2021. At the same time, the change of product structure and the appreciation of RMB also have a great impact on the gross profit margin of alloy tools. The net profit margin of sales was 16.8% (year-on-year -0.3pct), which was narrower than the gross profit margin. It was mainly due to the reduction of the period expense rate to 18.0% (year-on-year -1.0pct) under the benefit of scale, in which the sales / Management (including R & D) / financial expense rate was -0.1 / - 0.2 / - 0.7pct respectively year-on-year. In addition, non recurring gains and losses such as government subsidies and financial gains contributed 14.11 million yuan of profits.
In 2021, the R & D investment was 43.15 million yuan (year-on-year + 11.7%), accounting for 4.8% of the revenue. The company focuses on the improvement of cemented carbide performance, cone bit sealing and bearing structure. At the same time, in terms of cermet products, the company has developed a variety of products such as cermet bars, CNC blades and bearing blades.
The cash flow was slightly affected by the strong demand for orders and the sharp increase in inventories
At the end of 2021, the company's contractual liabilities amounted to 30 million yuan (year-on-year + 70%), with strong demand for orders; The inventory balance was 310 million yuan (year-on-year + 62.7%), mainly due to: ① in order to reduce the slowdown of logistics and the impact of site relocation on order delivery, increase the reserve of semi-finished products; ② The price of raw materials rises and goods are prepared in advance. Affected by inventory growth, the company's net cash flow from operating activities decreased slightly to 74 million yuan (year-on-year - 20%).
Mining cemented carbide leader with global competitiveness, capacity expansion + business expansion can be expected
(1) capacity expansion: the annual capacity of cone bits will increase from 31000 sets by the end of 2021 to 70000 sets by the end of 2023. BHP Billiton and other key customers as well as Africa, India and other regions are expected to further expand; The relocation of cemented carbide products plant is completed, and the production capacity will gradually climb to 1800 tons / year; (2) New products & new fields: the company will expand new impactor and top hammer drilling tools on the basis of cone bit; At the same time, it will also expand the lateral application of cone bit in infrastructure and petroleum fields; (3) Business expansion: the acquisition of Zhuzhou Weikai layout CNC tool business is expected to follow the growth path of Sandvik's independent research and development + epitaxial acquisition, develop into China's Cemented Carbide leader, and gradually expand overseas.
Profit forecast and investment rating: the company's production capacity is released rapidly. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 2.04 (down 14%) / 2.79 (down 11%) / 369 million yuan. The current share price corresponds to 16 / 12 / 9 times of PE, maintaining the "overweight" rating.
Risk warning: the downstream demand is less than expected, the overseas market is uncontrollable, and the price fluctuation risk of raw materials
