\u3000\u3 Guocheng Mining Co.Ltd(000688) 308 Oke Precision Cutting Tools Co.Ltd(688308) )
Event: the company released the first quarterly report of 2022. In 2022q1, the company achieved a revenue of 260 million yuan, a year-on-year increase of 16.4% and a month on month increase of 13.1%; The net profit was 22.7% higher than that of the parent company, with a year-on-year increase of 2.2 billion yuan. The company’s performance has increased steadily, which is in line with our expectations.
Affected by the repeated epidemic, the company’s revenue growth remained stable; The product structure was optimized and the gross profit margin continued to increase. In 2022q1, due to the repeated impact of covid-19 epidemic, the demand for CNC cutting tools and cemented carbide products decreased slightly. At the same time, Limited Logistics delayed the rhythm of product delivery, and the company’s revenue increased steadily. In 2022q1, the company’s comprehensive gross profit margin was 36.2%, with a year-on-year increase of 3.6 percentage points and a month on month increase of 1.6 percentage points. The improvement of the company’s gross profit margin was mainly due to the optimization of product structure: 1) the proportion of NC tool revenue continued to increase; 2) The proportion of high-end products in NC cutting tools and cemented carbide products increased.
Reducing costs and increasing efficiency, paying attention to R & D, and the net interest rate increased slightly year-on-year. During 2022q1, the expense rate of the company was 10.2%, with a year-on-year increase of 0.8 percentage points and a month on month decrease of 2.7 percentage points; Among them, the R & D expense rate was 5.4%, with a year-on-year increase of 1.5 percentage points. The increase in R & D expense rate shows that the company attaches importance to product R & D and innovation, which is in line with the company’s high-end development positioning. The net interest rate of 2022q1 company was 21.6%, with a year-on-year increase of 1.1 percentage points and a month on month decrease of 0.9 percentage points.
Domestic substitution of industrial cutting tools has accelerated, and the company has accelerated its transformation to an overall scheme supplier. Covid-19 epidemic reduces the supply of foreign brands, improves the quality and production of domestic cutting tools, increases effective supply, industrial chain safety, reduces production costs and increases the demand for domestic cutting tools, which promotes the acceleration of domestic substitution of industrial cutting tools. In 2021, the company sold 77.11 million NC blades, with a year-on-year increase of 43.1%. It also built a new NC Tool Industrial Park, increased the production capacity of new products such as bars, hardened tools, cermet blades and NC tool bodies, accelerated the transformation to an overall cutting solution supplier, and continued to promote the domestic substitution of industrial tools.
Profit forecast and investment suggestions. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 290 million yuan, 410 million yuan and 530 million yuan respectively, and the compound growth rate of net profit attributable to the parent company in the next three years will be 33.9%. Considering the high barriers in the NC tool industry, the acceleration of domestic substitution and the high certainty of the company’s performance, the company gave 30 times PE in 2022, the target price was 86.40 yuan, and maintained the “buy” rating.
Risk warning: covid-19 epidemic recurrence risk; Manufacturing investment fell sharply; The company’s capacity expansion was lower than expected.
