\u3000\u3 Guocheng Mining Co.Ltd(000688) 122 Western Superconducting Technologies Co.Ltd(688122) )
Event: on April 28, the company released its 2021 annual report and the first quarterly report of 2022. In 2021, the company realized revenue (2.927 billion yuan, + 38.54%) and net profit attributable to the parent company (741 million yuan, + 99.98%); In 2022q1, the company realized revenue (RMB 887 million, + 66.51%), net profit attributable to the parent company (RMB 215 million, 67.40%), and the performance of the first quarter exceeded the market expectation.
The volume of core products continued to increase and entered the stage of horizontal expansion. The production capacity was expanded in an orderly manner, laying a solid foundation for sustainable growth. Benefiting from the rapid release of the company’s production capacity in Jingwei district and the strengthening of the collaborative production capacity of the “Jingwei economic development” dual parks, the company achieved significant growth in order volume, output and revenue and profit in 2021, including:
The company continuously increased the sales volume of titanium products to 710.5 billion tons (PCT) and achieved a solid profit margin of + 68.45% for the year, reflecting the continuous improvement of the company’s core product structure (PCT + 684.5%), and the continuous improvement of the sales volume of titanium products to + 4.58% for the year, At the same time, focus on developing the aeroengine market, and step up the release of production capacity based on the demand of new models to cope with the high market boom and lay a solid foundation for the aviation incremental market;
2) high temperature alloy, realizing output (555t, + 67.67%) and sales (502t, + 104.07%) Revenue (102 million yuan, + 196.67%), thanks to the gradual mass production of Superalloy products, the gross profit margin of this business increased by 15.43pct to 4.01% year-on-year. The company’s key brand products have been delivered to customers in small batches. Typical superalloys such as GH4169 and GH738 have entered the stage of mass supply in 10 and other models of engines and Shangfa Changjiang series engines. At the same time, GH4169 has achieved mass supply in the domestic gas turbine market.
On a quarterly basis, the company’s revenue from 21q1-22q1 is RMB 533 million, RMB 723 million, RMB 835 million, RMB 837 million and RMB 887 million respectively. With reference to the fact that the company’s construction in progress has increased significantly by 900% compared with the beginning of the period due to the arrival of newly purchased equipment, we judge that the company’s production capacity is still in the expansion cycle. Based on this, it is expected that the revenue side is still expected to maintain an upward trend in 2022; Meanwhile, referring to the company’s gross profit margin of 22q1 (40.76%, year-on-year -0.5pct), it is basically the same as that of 2021. Considering that the price of raw materials is still high and the company’s cost accounting method is weighted average method, we expect that the gross profit margin of 22q1 will only decline slightly, or mainly due to the continuous optimization of the company’s core product structure and the continuous increase in the proportion of high value-added products, accompanied by the gradual release of the company’s new production capacity, The gross profit margin may enter the stabilization and recovery stage. Considering that the revenue scale may continue to improve under the expansion of production capacity, it is expected that the profit end of 2022 is expected to continue to maintain a good growth trend.
In 2021, the gross profit margin and net profit margin increased simultaneously, and the profitability was continuously enhanced driven by the scale effect. In our opinion, it is worth noting that the price of raw materials in the industry maintained an upward trend in 2021, but the gross profit margin of the company still increased by 2.92pct to 40.83% year-on-year. It is expected that it is mainly due to the continuous optimization of the structure of the company’s core products and the continuous realization of the scale effect after the gradual expansion of production scale; Meanwhile, referring to the year-on-year decrease of 4,32 PCT to 13.21% in the expense rate during 2021, and the decrease of 18 million and 20 million in credit impairment and asset impairment losses respectively, driving the annual net interest rate to increase by 7.96 PCT to 25.46%.
The forward-looking indicators of the balance sheet indicate a high boom and a significant improvement in cash flow in 2021. The company’s demand for goods in advance increased by 43.52% compared with that at the beginning of 2027, which was mainly due to the continuous increase of 223.52% of the company’s demand for goods in advance and the subsequent payment after the company’s delivery of goods at the beginning of 202107%, which was mainly due to the continuous increase of the company’s demand for goods in advance and the subsequent payment after the company’s delivery of goods at the beginning of 202107%; The substantial improvement in cash flow in 2021 was mainly due to the increase in operating receipts and the fact that the increase in expenditures for purchasing goods and receiving services was less than that of receipts.
A substantial fixed increase and expansion of production, opening the bottleneck of production capacity and boosting performance growth. The company plans to raise no more than RMB 2.01 billion, of which RMB 970 million will be used for the industrialization project of high-performance metal materials for aerospace. The construction period is 36 months. After completion, 5050 tons / year of titanium alloy materials and 1500 tons / year of superalloys will be added; 100 million yuan will be used for the industrialization project of high-performance superconducting wire rod. The construction period is 24 months. After completion, 2000 tons of superconducting wire rod for MRI will be formed. We have stated in several reports that the current military industry is in a high boom, the replacement and assembly of military aircraft are accelerated, and the engine is the bottleneck of aviation equipment production capacity. The downstream demand of the company is very strong. This fixed increase and expansion of production is conducive to opening the bottleneck of the company’s production capacity and helping the company’s performance to grow continuously.
Investment suggestion: China’s leading high-end aviation titanium alloy company has benefited from the acceleration of military aircraft replacement and assembly, the increase in the proportion of titanium alloy consumption of new models and the increase in the market share brought by the large volume of new models, and continues to open a new growth curve in the titanium alloy Market for engines; At the same time, the company is one of the key R & D and production enterprises of high-performance superalloy materials in China. In the future, with the large volume of new models of military engines, the performance growth of superalloys can be expected. Considering that this fixed increase and expansion of production will open the bottleneck of the company’s production capacity, it will lay a solid foundation for the company’s subsequent sustainable growth. We expect the net profit from 2022 to 2023 to be 970 million yuan and 1.32 billion yuan, with the corresponding valuation of 36x and 27x.
Risk warning: military orders are less than expected; Capacity expansion was less than expected
