\u3000\u3 Shengda Resources Co.Ltd(000603) 915 Jiangsu Guomao Reducer Co.Ltd(603915) )
Events
The company released its annual report for 2021, achieving a revenue of 2.9 billion yuan, a year-on-year increase of 35%; The net profit attributable to the parent company was 460 million yuan, a year-on-year increase of 29%; Net profit deducted from non parent company was 420 million yuan, with a year-on-year increase of 32%. The company released the first quarterly report of 2022, and achieved a revenue of 600 million yuan, a year-on-year decrease of 5%; The net profit attributable to the parent company was 65 million yuan, a year-on-year decrease of 19%; Deduction of net profit not attributable to the parent company was 59 million yuan, a year-on-year decrease of 23%.
The performance is basically in line with expectations; It is expected that the epidemic will ease and the profitability of the company is expected to gradually recover
In 2021, the net profit attributable to the parent company excluding equity incentive expenses was 498 million yuan, with a year-on-year increase of 34%, in line with market expectations. In 2021q4 and 2022q1, the company’s revenue changed by 11% / – 5% year-on-year respectively, and the net profit attributable to the parent company changed by – 8% / – 23% year-on-year, which was mainly affected by epidemic situation, inflation and other factors. In terms of profitability, the company’s gross profit margin in the first quarter of 2022 was 25%, a year-on-year decrease of 1.5pct, which was mainly affected by the rise of raw material prices.
Capacity expansion and product upgrading of general reducer; Expand construction machinery and Siasun Robot&Automation Co.Ltd(300024) special reducer
The company’s general reducer capacity expanded, and the projects of 350000 reducers and 1.6 million gear reducers continued to be promoted. In terms of high-end products, geno transmission is expected to complete the construction of a new plant in the first quarter of 2023, and the production capacity will increase to 90000 after the project is fully completed. The construction machinery business continues to develop new products and expand customers, and the production capacity continues to increase. The industrial gearbox business department is established, and the high-power PV reducer is expected to be fully upgraded and put into the market in the second half of 2022, helping the company expand in the fields of cement, coal, electric power, port, water conservancy and so on. In November 2021, the holding subsidiary Guomao precision transmission was established to expand new products such as harmonic reducer and RV Reducer.
The company has great growth potential due to capacity improvement, import substitution, product upgrading and new field expansion
1) the general reducer Market is about 50 billion. Benefiting from the increased demand for industrial automation, the obvious trend of domestic substitution and the continuous improvement of market concentration. The market share of the company was 3.8% in 2019, and there is much room for improvement in the future. 2) In 2020, the company made phased achievements in the field of special reducer for construction machinery. 3) Equity incentive plan of the company: the net profit from 2022 to 2024 shall not be less than / 4 / 4.8/6 billion yuan, with a compound growth rate of 20%. 4) The production capacity will be increased as planned. The company plans to add 110000 sets of reducer capacity by the end of 2021, and the annual sales volume is expected to exceed 390000 sets, with a year-on-year growth rate of more than 30%.
Profit and valuation forecast
It is estimated that the net profit from 2022 to 2024 will be RMB 610 / 730 / 880 million, with a year-on-year increase of 32% / 20% / 20%, corresponding to 15 / 13 / 11 times of PE respectively. With large growth space and long growth cycle, the company is expected to replicate the growth path of product upgrading and import substitution of Jiangsu Hengli Hydraulic Co.Ltd(601100) and other core parts companies. Continue to recommend and maintain the “buy” rating.
Risk warning: the import substitution process is lower than expected, and the improvement progress of market share is lower than expected.
