\u3000\u30 Jinzai Food Group Co.Ltd(003000) 34 Gaona Aero Material Co.Ltd(300034) )
Event: the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved a revenue of 2.003 billion yuan, a year-on-year increase of + 26.35%; The net profit attributable to the parent company was 305 million yuan, a year-on-year increase of + 49.56%; Deduct 178 million yuan of non parent net profit, a year-on-year increase of – 2.45%. In a single quarter, the revenue of 2021q4 was 578 million yuan, a year-on-year increase of + 11.80% and a month on month increase of – 2.98%; The net profit attributable to the parent company was 51 million yuan, with a year-on-year increase of – 30.27% and a month on month increase of – 33.43%; Net profit deducted from non parent company was – 50 million yuan, with a year-on-year increase of – 197.58% and a month on month increase of – 172.65%. In 2022q1, the company’s revenue was 522 million yuan, a year-on-year increase of + 49.21% and a month on month increase of – 9.57%; The net profit attributable to the parent company was 61 million yuan, with a year-on-year increase of + 10.39% and a month on month increase of + 19.57%; The net profit deducted from non parent company was 58 million yuan, with a year-on-year increase of + 17.85% and a month on month increase of + 215.12%.
Income statement: the income of all kinds of superalloys has increased, and the rise of raw material prices affects the profitability of the company.
1) revenue side: the revenue of cast superalloy was 1.201 billion yuan, a year-on-year increase of + 20.75%. In the military field, due to the integration of the casting superalloy division into Hebei Dekai, Hebei Dekai achieved a revenue of 576 million yuan in 2021, a year-on-year increase of + 308.13%. It not only realized the revenue growth with the aviation distribution volume, but also realized the batch delivery capacity of a large-size single crystal turbine blade and the batch production delivery task of multiple turbine castings; In the civil sector, Qingdao Xinlitong achieved a revenue of 567 million yuan in 2021, a year-on-year increase of + 8.37%, achieving steady growth. The revenue of deformed superalloy was 504 million yuan, with a year-on-year increase of + 26.32%, of which the market share of fist product GH4169 increased and the delivery volume reached a new high. In addition, a certain type of alloy turbine disk forging realized small batch production. The revenue of new superalloys was 285 million yuan, up + 54.42% year-on-year, mainly because the company, as an important research and production base of powder superalloys in China, has a rapid growth in the demand for powder superalloys by downstream aviation engines.
2) profitability: in 2021, the company’s gross profit margin was 28.18%, with a year-on-year increase of -6.42pct; The net interest rate was 16.47%, with a year-on-year increase of + 0.92pct. On the one hand, the decline in gross profit margin was mainly due to the sharp rise in the cost of raw materials. In 2021, the cost of raw materials accounted for 45.66% of revenue, with a year-on-year increase of + 10.12pct; On the other hand, in the case of a sharp decline in gross profit margin, the company’s net profit margin increased year-on-year, mainly due to other income (73 million yuan, year-on-year + 159.04%, from government subsidies) and a significant increase in investment income (60 million yuan, 0 in 20 years, from associated enterprises).
Raw materials account for 60% ~ 70% or more of the company’s costs. The price rise of nickel, chromium and cobalt in 2021 has a great impact on the company’s profitability. In the future, the company is expected to improve its profitability in a variety of ways: first, the company can optimize technology to improve the yield and qualification rate of superalloys, and adopt process improvement to improve equipment utilization and production efficiency, so as to reduce costs and increase efficiency; Second, the company renegotiates with customers for some orders in hand and increases the selling price of products; Third, with the growth of the company’s revenue scale, the scale effect is expected to have a positive impact on the company’s profitability.
Balance sheet: inventory and other items indicate that the company is expected to achieve rapid growth in the future. 1) Inventory: it was 858 million yuan at the end of 2021, an increase of 44.96% over the beginning of the period, and increased to 1.020 billion yuan in 2022q1, indicating that the company has increased its stock in response to the rapid growth of demand. 2) Notes payable and accounts payable: at the end of 2021, it was 1.048 billion yuan, an increase of 45.44% over the beginning of the period, indicating that the company increased procurement in response to the rapid growth of demand. 3) Contract liabilities: the contract liabilities at the end of 2021 were 81 million yuan, an increase of 45.94% over the beginning of the period, and increased to 103 million yuan in 2022q1. The advance payment received by the company increased significantly, or it seems that the company’s revenue is expected to increase in the future.
Gaona Aero Material Co.Ltd(300034) : a rare superalloy platform enterprise that can become PCC in China. As one of the enterprises with the largest production scale of high-end and new superalloys in China, on the one hand, the company continues to plough deeply in the field of aerospace engines and large-scale power generation equipment, on the other hand, it continues to expand to the fields of metallurgy, chemical industry, glass manufacturing and so on. Its strategic goal is very clear, aiming to build China’s PCC.
1. Own strength: the layout of superalloys has exceeded 60 years, involving deformation, casting and powder. It is a rare platform enterprise with the layout of the whole industrial chain from parent alloy to finished products. The company has developed more than 120 kinds of superalloys, including more than 90 kinds of deformed superalloys and more than 10 kinds of powder superalloys, accounting for more than 80% of this type of alloy in China Gaona Aero Material Co.Ltd(300034) has been deeply involved in the two machine superalloy industry chain. Casting / deformation / new superalloy has a high market share in the two machine fields, which will significantly benefit from the continuous growth of the demand of the two machine industries.
2. Race track: aeroengine is a trillion level track with long slope and thick snow, and superalloy is the core raw material of aeroengine. 1) At present, the acceleration of batch production of three generations of machines represented by WS-10 in China will bring a good scale effect to the company’s large single products; 2) At present, many new aircraft models have entered the stage of intensive finalization and batch production; 3) The market after aircraft maintenance is gradually opened, and Gaona Aero Material Co.Ltd(300034) with in-depth layout of aircraft maintenance market is expected to benefit greatly; 4) Domestic commercial aviation launch batch production will bring greater growth space.
3. Growth path: pay equal attention to the main business, extension and industrial chain extension, which is expected to build China’s PCC.
1) main business: focus on the field of aerospace engines and gas turbines, build a platform enterprise of high-temperature parent alloy materials + processed products, endogenous growth, pay close attention to the explosive demand of the aeroengine market, and bring huge growth space from the penetration of new models to the rapid expansion of the maintenance market.
2) extension: acquire Qingdao Xinli to expand the field of Superalloy centrifugal casting pipe and static casting, and open the market of petrochemical and metallurgical industries.
3) industrial chain extension: Hebei Dekai, a subsidiary, opened the international aerospace market in 2019. It is currently the highest level of aluminum alloy investment casting technology in China’s aerospace industry, the first-class titanium alloy casting technology in China, and the only enterprise in China that can realize industrialized magnesium alloy investment casting and production; In 2021, the strategic layout of metal additive manufacturing powder and other business areas will provide new momentum for the company’s future development.
Investment suggestion: Gaona Aero Material Co.Ltd(300034) aims to become a PCC in the field of two machines in China. It takes superalloy materials as the core, expands the industrial chain and value chain horizontally and vertically, and has a clear growth path and large space. In particular, it will grow rapidly by taking advantage of its platform product layout. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 478 million yuan, 697 million yuan and 979 million yuan respectively, and the corresponding PE will be 26x, 18x and 13X respectively, maintaining the “buy” rating.
Risk warning: the industrialization process of the company’s products is not as expected; Upstream raw material price rise risk.
