\u3000\u3 Guocheng Mining Co.Ltd(000688) 122 Western Superconducting Technologies Co.Ltd(688122) )
Event overview: the company released the 2021 annual report and the first quarterly report of 2022: in 2021, the company realized a net profit attributable to the parent company of 741 million yuan, a year-on-year increase of 100%; Net profit deducted from non parent company was 654 million yuan, with a year-on-year increase of 122.8%. In 2021q4, the company realized a net profit attributable to the parent company of 204 million yuan, an increase of 105.8% year-on-year and a decrease of 9.4% month on month; Net profit deducted from non parent company was 153 million yuan, with a year-on-year increase of 182.5% and a month on month decrease of 28.8%. In 2022q1, the company realized a net profit attributable to the parent company of 215 million yuan, an increase of 67.4% year-on-year and 5.6% month on month; Net profit deducted from non parent company was 202 million yuan, with a year-on-year increase of 77.6% and a month on month increase of 32%.
Comments:
① sales volume: in 2021, the sales volume of titanium alloy products of the company increased by 41.04% year-on-year. In 2021, the company’s orders were full, and the sales volume of main products increased. Among them, the sales volume of titanium alloy was 681349 tons, a year-on-year increase of + 41.04%; The sales volume of superconducting products was 556.92 tons, a year-on-year increase of + 13.20%; The sales volume of superalloys was 502.77 tons, a year-on-year increase of + 104.17%.
② price: the gross profit margin of Superalloy became positive, and the gross profit margin of the company increased by 2.91pct to 40.83%. The downstream of the company’s main products maintained a high outlook, the production and sales of superimposed products increased significantly, diluted fixed costs, and the gross profit margin of all the company’s main products increased. The gross profit margin of titanium alloy increased by 2.28pct year-on-year to 45.31%; The gross profit margin of superconducting products increased by 11.82 PCT year-on-year to 16.33%; The gross profit margin of superalloys became positive, with a year-on-year increase of 15.43pct to 4.01%.
③ 22q1: the revenue in a single quarter hit a record high, and the net profit attributable to the parent company was + 67.4% year-on-year. 22q1 company has strong downstream demand for its main products, the company’s orders are saturated, and the contract liabilities remain at a high level of 254 million yuan. 22q1 revenue increased by 66.51% year-on-year to 880 million yuan, a single quarter high, driving the gross profit to increase by 142 million yuan year-on-year.
Future focus:
① the progress of engine localization is accelerated, and the performance contribution of superalloy is expected to gradually appear. As one of the emerging suppliers of high-performance superalloy materials in China, several key models of aircraft engine superalloy materials have passed the long-term test examination of a certain model of engine, have the supply qualification and have begun to supply. With the gradual release of production capacity in the future, the contribution of Superalloy business performance is expected to gradually appear.
② the constant increase project will add superalloy + titanium alloy materials, which may fully benefit from the rapid development of downstream military industry and other fields in the future. The industrialization project of high-performance metal materials for aerospace invested by the fixed increase fund will increase the production capacity of 5050 tons of titanium alloy materials and 1500 tons of superalloys. After the fixed increase project is put into operation in 2024, the total production capacity of titanium alloy will reach 10000 tons. In terms of superalloys, with the first 2500 tons raised and invested by the company in 2019 put into operation in 2023 and the 1500 tons raised and invested by the company in 2024, the company’s superalloy production capacity will reach 6000 tons. At that time, the superalloy production capacity will be in the first echelon in China and will fully benefit from the rapid development of downstream military industry and other fields in the future.
Investment suggestion: benefiting from the development of aerospace and other downstream fields, the company has broad product demand space. With the production of high-end product projects, the company’s profitability is expected to continue to rise. We expect that the net profit attributable to the parent company from 2022 to 2024 will be RMB 977 / 1278 / 1618 million, corresponding to the closing price of RMB 75.97 on April 28, 2022, and PE will be 36 / 28 / 22 times from 2022 to 2024, maintaining the “recommended” rating of the company.
Risk warning: downstream demand is less than expected; The price rise of raw materials exceeded expectations; The project is not progressing as expected.
