\u3000\u30 Shenzhen Zhenye(Group)Co.Ltd(000006) 57 China Tungsten And Hightech Materials Co.Ltd(000657) )
Event overview
The company issued the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved an operating revenue of 12.094 billion yuan, a year-on-year increase of 21.92%; The net profit attributable to the parent company was 528 million yuan, a year-on-year increase of 138.60%; The net profit deducted from non parent company was 490 million yuan, with a year-on-year increase of 244.34%. In the first quarter of 2022, the company achieved an operating revenue of 3.027 billion yuan, a year-on-year increase of 12.77%; The net profit attributable to the parent company was 108 million yuan, a year-on-year increase of 37.82%; The net profit deducted from non parent company was 104 million yuan, with a year-on-year increase of 32.59%.
Analysis and judgment:
The blade and cutter business performed well, driving high performance. In terms of products, the revenue growth of blade and cutting tool business is high, and the gross profit margin remains at a high level. In 21 years, the company’s blade and cutting tool business revenue was 3.309 billion yuan (YoY + 15.04%), and the gross profit margin was 35.37% (YoY + 0.84pct); The income of alloy products is 2.986 billion yuan (YoY + 27.83%), the gross profit margin is 15.62% (YoY + 0.28pct), the income of powder products is 1.936 billion yuan (YoY + 4.95%), and the gross profit margin is 9.69% (YoY + 3.29pct); The income of refractory metal products is 1.506 billion yuan (YoY + 1.53%), and the gross profit margin is 12.97% (YoY + 2.57pct). In terms of regions, the company’s overseas revenue in 21 years was 2.713 billion yuan (YoY + 8.54%), and the gross profit margin was 16.03% (YoY + 0.38pct); China’s revenue is 9.381 billion yuan (YoY + 26.42%), with a gross profit margin of 20.35% (YoY + 1.01pct). Overall, in the past 21 years, the company’s comprehensive gross profit margin was 19.38% (YoY + 0.97pct) and net profit margin was 5.28% (YoY + 2.29pct), and its profitability was greatly improved. 22q1 company has a gross profit margin of 18.84% (yoy-1.06pct) and a net profit margin of 4.60% (YoY + 0.92pct). The company’s expense control ability has been strengthened. The sales / Management (including R & D) / financial expense ratio in 21 years is 3.11% / 8.11 / 0.94% (YoY is -0.54 / – 0.95 / – 0.32pct respectively), and the sales / Management (including R & D) / financial expense ratio in 22q1 is 3.60% / 7.84% / 0.70% (YoY is -0.42 / – 0.53 / – 0.39pct respectively).
The production capacity of NC cutting tools has been improved smoothly, and high-end blades are expected to continue in large quantities in the future. According to the survey summary of the company’s investors, in 2021, the production capacity of CNC blades of the subsidiary Zhuzhou drilling company exceeded 100 million, and the 10 million blades arranged by the self hardening company have also been put into operation, with a total production capacity of 110 million. In 21 years, the company’s CNC blade output reached 109 million pieces, accounting for about 25% of the country’s total output, ranking first in China. In addition, Zhuzhou drilling company has been approved to build two production lines of cutting tools for aerospace and automotive key parts in August 21, which will increase the production capacity of more than 10 million NC blades in total. The company’s NC blade production capacity in the 14th five year plan has reached 150200 million pieces, and the company’s NC blade business has huge growth space.
The application penetration rate of tungsten wire in photovoltaic field is improved, and actively expanding the production capacity of tungsten wire is expected to open up new growth space. The board of directors announced that the annual output of 9.72 billion yuan for the construction of high-intensity tungsten wire project in Chengdu will be 9.72 million yuan, which will be mainly used for the construction of high-intensity tungsten wire project in 2022. According to the public information, fine tungsten wire can upgrade and replace the fine steel wire in some application fields due to its high strength, wear resistance, good machinability and good fatigue resistance, so as to make up for the shortcomings of the fine steel wire, such as it is difficult to process finer and low strength, and because of its excellent machinability and high strength, the tungsten wire has a good cost performance in replacing the fine steel wire in some special fields. At present, tungsten wire for photovoltaic is facing the problem of high cost and has not been applied on a large scale. With the progress of large-scale production and technology, the cost of tungsten wire for photovoltaic is expected to decrease.
The leading position of the company is stable and continues to be optimistic about the future development of the company. In 2021, the company’s Cemented Carbide output was 13000 tons, and the leading position of China’s tungsten industry was stable. The company has many excellent subsidiaries. In 2021, the company’s Zhuzhou Hardware Co., Ltd. and Jinzhou company successfully passed the review of the national single champion of manufacturing industry. Zhuzhou Hardware Co., Ltd. was elected as the national green design demonstration enterprise of industrial products, and Zigong Great Wall hard surface materials Co., Ltd. of zihard Co., Ltd. was successfully selected as the third batch of specialized and new “little giant” enterprises. At the same time, the blade and cutting tool business, one of the company’s main businesses, has large import substitution space and can grow in the future.
Investment advice
Maintain the company’s revenue forecast for 20222023 unchanged, and add the revenue forecast for 2024. It is estimated that the revenue from 20222024 will be RMB 14.842/17.105/19.876 billion respectively; Adjust the forecast of net profit attributable to parent company from 2022 to 2023, from the previous 676 / 830 million yuan to 725 / 878 million yuan, and add the forecast of net profit attributable to parent company of 1.112 billion yuan in 2024. Adjust the EPS forecast for 20222023 from the previous 0.63/0.77 yuan to 0.67/0.82 yuan, and add an EPS forecast of 1.04 yuan in 2024; Based on the closing price of 9.56 yuan on April 28, 2022, the corresponding PE from 2022 to 2024 is 14 / 12 / 9 times respectively. We maintain the company’s “overweight” rating.
Risk tips
Capacity expansion is less than expected; The downstream prosperity is lower than expected; Industry competition intensifies.
