\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 the first quarterly report of 2022 on April 23. The annual revenue of 2021 was 1.17 billion yuan, yoy + 90.7%; The net profit attributable to the parent company was 410 million yuan, yoy + 101.7%. In the first quarter of 2022, the revenue was 430 million yuan, yoy + 127.1%; The net profit attributable to the parent company was 140 million yuan, yoy + 89.6%. The company’s performance is within the scope of the previous performance forecast, which is in line with market expectations.
Deeply engaged in the aviation forging industry, the revenue and net profit increased rapidly. In a single quarter, the company achieved revenue of 190 million yuan, 280 million yuan, 300 million yuan and 410 million yuan in 2021q1 ~ q4:1) respectively; The quarterly net profit was RMB 100 million and RMB 190 million respectively, and the quarterly net profit was RMB 100 million and RMB 400 million respectively; 2) The gross profit margin in a single quarter is between 45.6% and 47.7%; The net interest rate is between 32.5% and 39.6%, and the profit margin level between quarters is relatively balanced. In terms of products, the company’s die forging product revenue in 2021 was 1.11 billion yuan, yoy + 108.7%, accounting for 8.2ppt to 95.1% of the total revenue year-on-year, and the gross profit margin increased by 1.3ppt to 47.3% year-on-year. The revenue of core products boosted the overall performance. 22q1 performance continued to rise, and the net profit attributable to the parent company increased by 89.6%.
Decrease in cost rate during the period; R & D investment increased. In 2021, the overall period expense rate of the company decreased by 1.6ppt to 6.4%. Specifically, 1) the sales expense rate was 0.4%, a year-on-year decrease of 0.2ppt; 2) The management fee rate was 3.1%, with a year-on-year decrease of 1.3ppt; 3) The financial expense ratio was – 0.9%, basically the same as that of the same period of last year; 4) The R & D expense rate is 3.7%, slightly lower than the same period (3.89% in 2020). However, the company invested 43 million yuan in R & D in 2021, yoy + 81.67%, with a large increase in R & D, which is mainly used for forging process optimization and technology R & D, aiming to improve forging quality, develop new technologies and expand new space in the industrial chain. The company’s gross profit margin in 2021 was 46.7%, up 1.7ppt year-on-year; The net interest rate was 35.2%, with a year-on-year increase of 1.9ppt, strong cost control ability and steady increase in profit margin.
Increase in inventories and contract liabilities; The production / sales / inventory of forged parts increased significantly. By the end of 2021, the company had: 1) accounts receivable and bills of 650 million yuan, an increase of 2.3% over the beginning of the year; 2) The inventory was 1.02 billion yuan, an increase of 33.5% over the beginning of the year. The annual output of special alloy forging was 4851, yoy + 58.1%; 4029 pieces sold, yoy + 98.6%; The inventory was 2373 units, yoy + 53.1%, benefiting from the large amount of equipment, and the order demand continued to grow; 3) Contract liabilities were 6.352 million yuan, an increase of 226.0% over the beginning of the year, mainly due to the large amount of advance payment; 4) The net cash flow from operating activities was 370 million yuan, yoy + 608.6%, mainly due to the large increase in cash received from the sale of goods and the provision of labor services. The total assets of the company were 4.131 billion yuan, an increase of 59.2% over the beginning of the year, due to the receipt of funds raised from convertible corporate bonds.
Investment suggestion: the company is an important supplier of domestic aircraft fuselage structural parts, and has been deeply engaged in the forging field of special alloys such as titanium alloy and high-strength steel for many years. In February 2022, the company announced that it planned to expand its production by 3.13 billion yuan to build a comprehensive business platform of “forging parts processing Department component equipment”, and announced that it planned to implement the equity incentive plan at the same time. We expect the net profit attributable to the parent company from 2022 to 2024 to be 640 million yuan, 850 million yuan and 1.09 billion yuan respectively. The current share price corresponds to 27x / 20x / 16x PE from 2022 to 2024. Considering the high prosperity of equipment manufacturing development in the 14th five year plan and the company’s core position in the special alloy forging industry, we give 35 times PE in 2022, EPS of 1.28 yuan / share in 2022, and the corresponding target price of 44.80 yuan. Maintain a “recommended” rating.
Risk warning: the order is not delivered in time; Downstream demand is lower than expected
