\u3000\u3 Shengda Resources Co.Ltd(000603) 028 Jiangsu Safety Wire Rope Co.Ltd(603028) )
Leading enterprise of special steel wire rope, benefiting from urban renewal and steady growth: the company is an old brand manufacturer engaged in steel wire rope R & D, design and production in China. Its “Dali brand” steel wire rope and “Jianfeng brand” rigging enjoy high popularity and brand reputation in the industry. Its products are used in elevator, hoisting, rigging and other industries, such as Mitsubishi elevator, Schindler Elevator, Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) , Sany Heavy Industry Co.Ltd(600031) , CNOOC China Petroleum & Chemical Corporation(600028) and other important suppliers of well-known enterprises. The company has fully benefited from urban renewal, old city transformation, new urbanization construction and steady growth policies. The special steel wire rope business shows a trend of booming supply and demand and continuous improvement of capacity utilization. From 2019 to 2021, the company’s business income of metal wire sheet and finished products was 598 million yuan, 657 million yuan and 782 million yuan respectively, with a year-on-year increase of 18.32%, 9.94% and 18.96% respectively; The production volume was 53644 tons, 59313 tons and 71719 tons respectively, with a year-on-year increase of 8.19%, 10.57% and 20.92% respectively. The sales volume was 53605 tons, 59184 tons and 68810 tons respectively, with a year-on-year increase of 10.55%, 10.41% and 16.26% respectively. With the increase of steady growth and the promotion of new urbanization, the industry demand will continue to release, opening up the growth space of special steel wire rope business.
The expansion of extension into architectural design accelerated the release of regional deep ploughing performance: in May 2020, the company acquired 100% equity of Tongren design, and the performance commitments from 2020 to 2022 are that the net profit after deduction of non-profit is not less than 25 million yuan, 30 million yuan and 35 million yuan respectively. From 2020 to 2021, the net profit attributable to the parent company of the same person design was 25.67 million yuan and 29.69 million yuan respectively, with completion rates of 102.68% and 98.97% respectively, accounting for 47.74% and 52.13% of the net profit attributable to the parent company of the current year. Tongren design, formerly known as Suzhou Electronic architectural design office, is mainly engaged in architectural design and EPC project management. It has class a qualification in architectural design, and its business fields cover residential, commercial, office, education, medical and other fields. Tongren design adopts the regional deep ploughing strategy and mainly serves Wuzhong District, especially the economic development zone. Since May 2020, the company has announced that the total bid winning amount of architectural design and EPC projects has reached 3.06 billion yuan, and all the bid winning orders come from Wuzhong District. It is expected that with the increase of development intensity and intensity of Wuzhong District, especially the introduction of urban renewal, area development, park development and other projects, it will provide good project support for Tongren design development. The company has built an extension business, accounting for 50% of the company’s growth curve in the future, and the company’s performance will continue to improve by more than 50% in the same year.
With the increase of equity investment, the power battery is worth looking forward to: the company actively plans for long-term development, seizes the opportunity of Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) and actively makes equity investment. In July 2020, the company invested 30 million yuan to acquire 2.1583% equity of Saiao biology, taking the first step of equity investment and involved in the research and development and production of cellular drugs. In November 2021, the company invested 7 million yuan to subscribe for 18.92% equity of xinjuli, and the equity investment business will go to the next city. Xinjuli is mainly engaged in the R & D and sales of customized and intelligent complete logistics systems for power battery manufacturers, and mainly provides customers with the scheme design of designing, developing and manufacturing complete automatic logistics systems for new energy power batteries, intelligent storage systems, unmanned handling Siasun Robot&Automation Co.Ltd(300024) , automatic transportation and sorting systems, complete automatic test logistics equipment systems and automatic logistics software systems, And the service of smart factory information management system, providing solutions integrating data simulation, equipment manufacturing, installation and commissioning and after-sales service. In March 2022, the company plans to establish Suzhou Jiangsu Safety Wire Rope Co.Ltd(603028) Investment Management Co., Ltd., with a registered capital of 100 million yuan. Based on the company’s long-term strategic planning, the company will speed up the industrial layout, improve the company’s comprehensive competitiveness and corporate brand influence, and the equity investment business is expected to increase.
The orders are sufficient and the future growth can be expected. The increase of holdings + repurchase shows confidence: the company operates steadily, the profitability has been improved, the overall debt ratio is low, the cash flow management is relatively good, and the asset turnover rate has been improved. The company has sufficient orders and can grow in the future. The special steel wire rope business adopts the strategy of setting production by sales. In recent years, it has shown the characteristics of booming supply and marketing, and the capacity utilization rate has increased year by year. It is expected that with the strengthening of urban renewal, old city transformation, new urbanization construction and steady growth, the company’s special steel wire rope business will maintain a good development trend. The architectural design business adopts the regional deep ploughing strategy, vigorously develops the two major businesses of architectural design and EPC whole process management, and the orders have increased rapidly. Since May 2020, the same person design has announced a total contract amount of 3.06 billion yuan for major winning projects, helping the rapid development of the same person design. The company actively arranges Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) , especially in new energy fields such as power batteries, which is expected to make a positive contribution to the company’s performance in the future. The chairman and general manager of the company have actively increased their holdings of the company’s shares. It is expected that the proportion of increased holdings will be between 2% and 5%. At present, the increase has exceeded 1%. At the same time, the company has launched a share repurchase plan, which plans to repurchase 25 million yuan to 50 million yuan at a price of no more than 13.8 yuan / share. All the shares repurchased are used for equity incentive or employee stock ownership. Dong Jiangao’s positive increase in shareholding shows the management’s recognition of the company’s value. The repurchase and incentive of listed companies will help stimulate management efficiency and employee enthusiasm and help the company grow in the future.
Investment suggestion: maintain the “Buy-A” investment rating, and the six-month target price is 11.20 yuan. It is estimated that the overall operating revenue of the company from 2022 to 2024 will be RMB 1.171 billion, RMB 1.474 billion and RMB 1.819 billion respectively, with a year-on-year increase of 27.90%, 25.90% and 23.36% respectively; The net profit attributable to the parent company was 80 million yuan, 109 million yuan and 142 million yuan respectively, with a year-on-year increase of 40.21%, 35.90% and 30.67% respectively; Dynamic PE was 30.91 times, 22.75 times and 17.41 times respectively, and Pb was 2.90 times, 2.66 times and 2.40 times respectively. The company’s special steel wire rope directly benefits from the steady growth policy and the construction of new urbanization. The production is determined by sales and the supply and marketing are booming. The capacity utilization rate continues to improve, and the performance is expected to accelerate the release. At the same time, the company adopts the extension and expansion to enter the architectural design, and the same person design adopts the regional deep cultivation strategy. The orders and performance are growing at a high speed, and there is still a large development space in the future. In addition, the company actively distributes Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) , biomedicine and power battery become the focus of investment, and Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) is expected to become a new performance growth point of the company in the future. We are optimistic about the development prospect of special steel wire rope and architectural design, the “double main industry” under steady growth, urban renewal and old city reconstruction, and the Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) layout improves the valuation of the company, maintaining the “Buy-A” rating, with a target price of 11.20 yuan, corresponding to 40 times of dynamic PE in 2022.
Risk tips: abnormal fluctuation of steel price, intensified industry competition, product price fluctuation, slow rise of market share, failure of equity investment, and less stable growth policy than expected.
