\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 75 Xi’An Triangle Defense Co.Ltd(300775) )
Event: the company released its 2021 annual report, and achieved an operating revenue of 1.172 billion yuan, a year-on-year increase of 90.67%; The net profit attributable to the parent company was 412 million yuan, a year-on-year increase of 101.70%; The non net profit deducted was 405 million yuan, a year-on-year increase of 121.58%.
Key investment points
The performance increased rapidly and the gross profit margin increased slightly. The substantial increase in revenue was mainly due to the increase in the output value of special alloy forging. The revenue of special alloy forging branch in the whole year was 1.147 billion yuan, a year-on-year increase of 94.97%, accounting for 97.90% of the company’s total revenue. In terms of products, the company’s main revenue comes from die forging products, with a revenue of 1.114 billion yuan, accounting for 95.05% of the total revenue. The gross profit margin of the company’s overall products increased slightly by 2.13pct compared with the same period in 2020, of which the gross profit margin of die forging business increased by 1.24pct.
Focus on military equipment structural parts business and benefit from the high prosperity of the military industry. The company is mainly engaged in the business of structural parts and engine components of military aircraft. With China’s leading and world-class 400mn die forging hydraulic press technology, the company has entered the supplier list of major main engine manufacturers in the fields of aviation, aerospace and shipbuilding. Its products have been applied to the new generation of fighter aircraft, new generation of transport aircraft and new generation of helicopters. Driven by the Centennial goal of military construction and practical training, the large-scale speed of various equipment models has been accelerated, The company’s performance is expected to grow rapidly.
Prepare to build an intelligent manufacturing base and expand high value-added business. The company completed the issuance of convertible bonds in the first half of 2021, raising a total of 9043727 million yuan, which is mainly used for the construction of advanced aviation parts intelligent interconnection manufacturing base project, and the project has been successfully started. At present, the forging products of the company are mainly in the blank state, and will be delivered to the rough machining state and precision machining state in the future, so as to tap the added value of the extension of the forging industry chain and consolidate and expand the dominant position of the company in the field of aviation forgings in China. At the same time, carry out advanced processing business in the aviation field. At present, there are only a few main engine factories in China to carry out this business, with less market competition and high added value. The project can increase the company’s market share in the aviation manufacturing field and enhance the company’s industrial competitiveness.
Profit forecast and investment rating: Based on the high prosperity of the military industry during the 14th Five Year Plan period and the company’s leading position in China’s aviation forgings, it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 607 million yuan, 852 million yuan and 1071 million yuan respectively, and EPS will be 122 million yuan, 172 million yuan and 2.16 yuan respectively, corresponding to 29 / 20 / 16 times of PE respectively. It will be covered for the first time and given a “buy” rating.
Risk tips: 1) downstream demand and order fluctuation; 2) The company’s profit is less than expected; 3) Market systemic risk.
