\u3000\u3 Guocheng Mining Co.Ltd(000688) 186 Zhangjiagang Guangda Special Material Co.Ltd(688186) )
Event:
The company released the first quarterly report of 2022, realizing a revenue of 660 million yuan, a year-on-year increase of 9%; The net profit attributable to the parent company was 21 million yuan, a year-on-year decrease of 68%. The company plans to issue convertible bonds to raise no more than 1.55 billion yuan for large-scale high-end equipment core precision parts projects and supplement working capital.
Comments:
High costs put pressure on performance. Taking pig iron and scrap steel, the main raw materials of the company's casting products, for example, the average price of 2022q1 increased by nearly 12% and 18% year-on-year respectively; In addition, the price of 2022q1 products has declined, so the gross profit margin is only 15%, down 7.2pct year-on-year.
Logistics transportation has a great impact. The company also said in the investor's Q & A that the epidemic had little impact on the company's commencement in the first quarter, and the main logistics and transportation were greatly affected. And the company's inventory has increased significantly, so we believe that the epidemic is another important factor affecting the company's operation.
Convertible bonds are proposed to be issued, and the gearbox parts project continues to be promoted: the convertible bonds are proposed to raise 1.15 billion yuan for the construction of gearbox parts project, which is an important source of funds for the project. After the completion of the project, the company will have an annual output of 84000 pieces of large gearbox parts and other precision machinery parts of wind turbine units. Considering the 24 month construction period of the project, we expect the project to be put into operation in 2023.
Zhangjiagang Guangda Special Material Co.Ltd(688186) : focus on energy equipment parts and high-end special steel materials. In addition to the gearbox parts under construction, the company's newly established subsidiary, Dongfang Motor Corporation, achieved a steel casting revenue of 300 million yuan in 2021. We believe that with the continuous promotion of the company's quality and efficiency improvement, the steel casting business is expected to contribute more performance increment. In the high-end special steel material sector, the company has successfully developed and supplied special stainless steel, superalloy and high-strength steel in small quantities. In addition, the company has expanded the production capacity of special alloy materials such as superalloys and corrosion-resistant alloys.
Profit forecast and investment rating: we expect the company's revenue to be 3.7/4.6/5 billion yuan from 2022 to 2024, with a growth rate of 37% / 23% / 19% respectively; Based on the company's 2022q1 performance, we adjusted the company's net profit attributable to the parent company from 580 / 770 million yuan to 260 / 400 million yuan from 2022 to 2023. The net profit attributable to the parent company from 2022 to 2024 was 260 / 400 / 600 million yuan respectively, with a corresponding growth rate of 45% / 57% / 51% and a corresponding PE of 17x / 11x / 7X respectively. Considering that Deyang subsidiary and wind power casting projects of the company are gradually in large quantities, the gearbox project continues to promote, the company has high growth and low valuation, so the "buy" rating of the company is maintained.
Risk warning: price fluctuation of raw materials; The production of the company is less than expected
