\u3000\u3 Guocheng Mining Co.Ltd(000688) 122 Western Superconducting Technologies Co.Ltd(688122) )
Based on titanium alloy, the multi-dimensional business of Superalloy / superconductor materials has developed in an all-round way
The full name of the company is Western Superconducting Technologies Co.Ltd(688122) , which is the core supplier of titanium alloy materials for China's national defense and military industry. At present, the company's main business is divided into three parts: high-end titanium alloy materials, superconducting products and high-performance superalloy materials. The company's products are positioned as "international advanced, Chinese blank and solving urgent needs", serve the national strategy and make up for the "short board" of key materials urgently needed in China's new fighter and ship manufacturing.
The performance of Xingwen Zhiyuan increased steadily, and the net profit in 2021 increased by 100.39% year-on-year, fulfilling the high outlook of the industry
In recent years, the company's operating revenue and net profit attributable to the parent company have increased steadily. In 2021, the company achieved rapid and large-scale performance and achieved the high-profile bearing of the national defense and military industry. From 2018 to 2020, the company achieved steady growth in operating revenue and net profit attributable to the parent company, with a three-year compound growth rate of 29.75% / 37.71%. Meanwhile, according to the company's performance express in 2021, the company achieved an operating revenue of 2.935 billion yuan in 2021, a year-on-year increase of + 38.91%; It is estimated that the net profit attributable to the parent company will be 743 million yuan, a year-on-year increase of + 100.39%, and the performance will achieve a higher than expected growth. We believe that the continuous improvement of the company's operating performance is mainly due to the continuous increase in the demand of the downstream national defense and military industry, the relatively full orders on hand, the continuous improvement of the production and sales volume and the overall utilization rate of production capacity of core main industries such as titanium alloy, the continuous large-scale production of main products and the realization of the high prospect of the industry.
The high business cycle of the national defense industry has come, and the company's titanium alloy / superalloy business is expected to fully benefit from the increased demand for new generation weapons and equipment
Direction of the 14th five year plan: new military materials are the basic support for the leapfrog development of our military equipment. The leapfrog development of weapons and equipment has entered a period of disruptive technological breakthroughs, and the breakthroughs in key core technologies will be accelerated. The 22nd Politburo meeting pointed out the key contents of the 14th five year plan for the construction of our army: strive to realize the great leap forward development of our army's modernization, accelerate the breakthrough of key core technologies, and accelerate the development of strategic, cutting-edge and subversive technologies. We believe that the new generation of aviation equipment, precision strike weapons, unmanned equipment and its middle-level support - informatization, bottom support - new materials will be the main benefit areas, or will usher in a high boom stage in the 14th five year plan, and new military materials are expected to play a bottom-level basic support role in all kinds of equipment in the 14th five year plan.
The company has been deeply engaged in the field of titanium alloy for many years, and the new fighter / transport terminal has obvious first mover advantage. A variety of new titanium alloys independently developed and mass produced by the company have filled many gaps in China and ensured the supply of key materials urgently needed by the country. Among them, three main brands of new titanium alloys have become the main titanium alloys for aviation structural parts and fasteners in China, providing key materials for the first flight and mass production of China's new fighters and transport aircraft. We believe that with the continuous increase of leapfrog weapons and equipment such as various fighter aircraft, the market demand of titanium alloy will increase rapidly. The corresponding business of the company is expected to fully benefit from this process, and the production scheduling is expected to continue to accelerate.
The superalloy industry is in the ascendant, the certification continues to promote, and the products are expected to accelerate production scheduling. As one of the emerging suppliers of high-performance superalloy materials in China, the company has successively undertaken the research and development of several superalloy materials for China's key national defense equipment. The examination and test of a superalloy powder disk component is progressing smoothly; Several grades of high-temperature alloy large-size bars have obtained the supply qualification of materials for an aeroengine; The superalloy materials of several key types of aeroengines have passed the long-term test of a certain type of engine, have met the supply qualification and have begun to supply; The pure purification smelting control technology of Superalloy ingots has been significantly improved, and the "zero occurrence" of major metallurgical defects has been realized. Therefore, we judge that with the rapid development of the national defense industry and the continuous promotion of the company's high-temperature alloy business certification process, the company's related products are expected to achieve rapid and large-scale production. At the same time, considering that the company's business is in its infancy, with the increase of product yield, the gross profit margin of Superalloy business has a large elastic space.
Profit forecast and rating: To sum up, we believe that with the high boom cycle of the national defense industry, the company's titanium alloy / superalloy business is expected to achieve rapid volume; In terms of superconducting wires, it is expected that the products will be gradually extended with downstream fields such as cfetr project to accelerate production scheduling. Under this assumption, the company is expected to achieve an operating revenue of RMB 2.935/38.97/5.318 billion and a net profit attributable to the parent company of RMB 743/9.74/1.360 billion from 2021 to 2023, with a corresponding EPS of 1.60/2.10/2.93 and a corresponding PE of 49.15/37.50/26.86x, giving a "buy" rating.
Risk warning: the risk that the technical level lags behind the competitors in the same industry; Substitution risk of aluminum lithium alloy, composite materials and other materials to titanium alloy; Risk of high market concentration and demand fluctuation; Risks of raw material procurement, etc.
