\u3000\u3 Shengda Resources Co.Ltd(000603) 667 Zhejiang Xcc Group Co.Ltd;(603667) )
Performance review
The company released the first quarterly report of 2022 on April 29. In 2022q1, the revenue was 880 million yuan (year-on-year + 59.8%), and the net profit attributable to the parent company was 40 million yuan (year-on-year + 21.1%). The performance growth was mainly due to the increase in revenue brought by the merger with FLT company, the smooth expansion of new customers and the increase in orders brought by the mass production of roller / automobile airbag gas generator components.
Business analysis
A breakthrough has been achieved in wind power. Under the trend of large-scale wind power, the bearing rollers of units above 3MW have a strong competitive advantage over steel balls, and there is a huge space for domestic substitution. The company has long-term technology accumulation and has the advantage of vertical integration of industrial chain. The products have been supplied to Germany Thyssen group, Japan Daye axis, China Luoyang Xinqianglian Slewing Bearings Co.Ltd(300850) / Yantai Tiancheng and other high-quality customers. The gross profit margin is 36.8% in 2021 and is expected to maintain a high level this year. Future growth focuses on the rhythm of capacity release: at present, the capacity is tight. It is expected that after the roller branch is gradually put into operation, the capacity will reach 12 / 18 / 22 million grains respectively from 2022 to 2024, and the corresponding output value will be 550 million yuan after all put into operation. At the same time, pay attention to the improvement of profitability brought by scale effect.
Optimize the customer structure of ring / bearing business. After the acquisition of FLT, an old European bearing company, further expand the European market, optimize the customer structure of finished bearings, and focus on the two markets of automobile and industrial transmission at the same time. In terms of ferrule business, it has strategic cooperation with SKF, the largest customer, and fixed-point supporting Tesla drive motor bearing ferrule in North America; Develop new customers such as Japan bueryue and China Wazhou group. With the production of SKF Qingdao plant this year, the production and sales volume is expected to continue to expand.
The production, sales and profitability of auto parts business have been improved. The company’s products focus on the development of new energy vehicles. Airbag gas generator components have expanded customers, including Autoliv, Ningbo Joyson Electronic Corp(600699) , Byd Company Limited(002594) etc. after gradual mass production, the gross profit margin rose to 12.6% (year-on-year + 9.2pct) in 2021, which is expected to further increase this year.
2022q1 management rate / financial rate dropped. The management rate and financial rate in 2022q1 are 5.3% (mom-3.2pct) and 1.2% (mom-1.3pct) respectively. The impact of relevant management expenses arising from equity incentive and acquisition of FLT and the provision of interest expenses of convertible bonds is mitigated compared with 2021q4.
Investment advice
It is estimated that the company’s net profit attributable to the parent company from 2022 to 2024 will be 230 / 3.1 / 420 million yuan, EPS will be 0.75 yuan, 1.03 yuan and 1.41 yuan respectively, and the corresponding PE will be 13 times, 9 times and 7 times respectively, maintaining the “buy” rating.
Risk tips
Customer demand is less than expected, production capacity release progress is less than expected, raw material price rise risk, etc.
