\u3000\u3000 Henan Hengxing Science & Technology Co.Ltd(002132) (002132)
Event: the performance forecast for 2021 was released, which was in line with expectations. The company predicts that the net profit attributable to the parent company in 2021 will be 130-169 million yuan, with a year-on-year increase of 6.29% – 38.18%, of which the net profit attributable to the parent company in 2021q4 will be 39-78 million yuan, with a year-on-year increase of 5.4% – 110.8%, turning losses into profits month on month. In 2021, despite the impact of the epidemic and the sharp fluctuation of raw material prices, the company’s main business remained stable, and the production and sales volume of diamond line business increased significantly year-on-year, driving the increase of the company’s profit.
The production capacity of diamond line business expanded rapidly to meet the new year of photovoltaic installation. The company’s existing production capacity of diamond line has reached 1 million kilometers, and the monthly shipment volume ranks in the forefront of the industry. The “reconstruction and expansion project of ultra-fine diamond line with an annual output of 10 million km” under construction is about to be completed; The “ultra fine diamond wire project with an annual output of 30 million kilometers” was promoted in an orderly manner. After the completion of the above projects, the company will realize the annual production capacity of 46 million km diamond line, which is at the leading level in the industry. After November 2021, the high price of photovoltaic industry chain will drop, the downstream installed demand is expected to be further released in 2022, the company’s diamond line capacity will expand rapidly, and its profitability is expected to be greatly improved.
The silicone project is located in a locked location, with wide demand, convenient transportation and low cost. In 2018, the company invested RMB 2.1 billion in Inner Mongolia to build the “120000 tons / year high-performance silicone polymer project”, which has recently entered the stage of commissioning and trial production. The project is located in Dalat Economic Development Zone, Dalat banner, city Inner Mongolia Eerduosi Resources Co.Ltd(600295) . The development zone is close to Baoshen railway, Baodong expressway, Baotou Airport and Erlianhot port. The transportation of raw materials and products is very convenient; The development zone is rich in methanol and hydrochloric acid raw materials, which can be obtained nearby for the project. The company’s Silicone project has the advantages of low raw material cost and low transportation cost. It is expected to release 70% – 80% of the production capacity in 2022, significantly improving the company’s profitability.
Investment suggestion: the operation of the company’s steel strand and steel cord business is stable, and the diamond wire business expands rapidly with the downstream installation demand; The release of production capacity of silicone project will help the company make multi line efforts. We expect the company to achieve revenue of RMB 3.01/75.2/9.13 billion and net profit attributable to the parent company of RMB 162/759/1.03 billion from 2021 to 2023, corresponding to pe47.7 billion 3 / 9.0 / 6.6, maintaining the “overweight” rating.
Risk tip: the PV installation demand is less than expected; The downstream demand of silicone is lower than expected; Macroeconomic fluctuations.
