\u3000\u3000 Wuxi Paike New Materials Technology Co.Ltd(605123) (605123)
Key investment points
Focusing on the high-end forging field, the products are widely used in national defense, electric power and other fields: the company focuses on the field of metal forgings, has strong product R & D and manufacturing capacity, has a complete forging manufacturing process, can process a variety of metal materials, and has the ability to undertake cross industry, multi specification, large, medium and small batch and other types of businesses. The company’s products are used in many industries such as aerospace, electric power and petrochemical, and has formed a solid business cooperation relationship with many large high-quality customers at home and abroad, including China’s leading enterprises in various fields such as China aviation development, Aerospace Hi-Tech Holding Group Co.Ltd(000901) , aerospace science and industry, aviation industry and Shanghai Electric Group Company Limited(601727) , as well as international high-end equipment manufacturers such as RORO in the UK, Mitsubishi Electric in Japan and Siemens in Germany.
As a core supporting supplier of aeroengines and missiles, it is expected to continue to benefit from the high boom in the military industry during the 14th five year plan: Aerospace forging business is the company’s largest source of profit. From 2018 to 2021h1, its revenue proportion increased from 16.57% to 38.97%, and its gross profit proportion increased from 28.93% to 58.92%. As a leading enterprise of ring forgings in China’s aerospace and other high-end fields, the company has strong equipment, process and technical advantages. Its products cover multiple models of aeroengines, multiple models of launch vehicles and missiles, and a certain model of gas turbine for naval ships in service and research. It is expected to continue to benefit from the high boom in the military industry during the 14th Five Year Plan period.
The company strengthens the market development of high-end products such as domestic substitutes, and civil products are expected to maintain rapid development: the company continues to strengthen product R & D and market development. While focusing on the development of military products business, the company actively develops the market of high-end products such as commercial aviation, nuclear power and import substitutes in the civil field. In the field of commercial aviation, the company signed long-term agreements with Luo Luo and Ge aviation for 11 and 5 years respectively, covering a variety of best-selling models, and transferred the production of titanium alloy fan casing to the Chinese market for the first time; In the field of nuclear power, the company actively participates in the R & D of the fourth generation nuclear power products, realizes the localization and batch supply of some key components, has obtained the manufacturing license of civil nuclear safety equipment, and will increase its investment in the R & D of civil nuclear products in the future; The company also focuses on the development of photovoltaic, hydropower and other clean energy fields. With the company actively exploring the high-end product market, civil products are expected to maintain rapid growth.
Profit forecast and investment rating: Based on the development prospect of the company’s forging business, we expect the net profit attributable to the parent company from 2021 to 2023 to be 270 million yuan, 373 million yuan and 501 million yuan respectively, EPS to be 250 million yuan, 345 million yuan and 464 times respectively, corresponding to PE to be 46 times, 33 times and 24 times respectively. It is covered for the first time and given a “buy” rating.
Risk warning: order fluctuation risk; Product delivery progress is less than expected; The company’s profit is less than expected; Market fluctuation risk.
