\u3000\u30 Shenzhen Zhenye(Group)Co.Ltd(000006) 57 China Tungsten And Hightech Materials Co.Ltd(000657) )
The company released its annual report for 2021. In 2021, the company achieved a revenue of 12.094 billion yuan, a year-on-year increase of 21.92%, a net profit attributable to the parent of 528 million yuan, a year-on-year increase of 138.60%, deducting 490 million yuan of non attributable net profit, a year-on-year increase of 244.34%. In a single quarter, Q4 achieved a revenue of 2.404 billion yuan, a year-on-year decrease of 27.09%, and a net profit attributable to the parent company of 130 million yuan, a year-on-year increase of 87.77%.
The company announced the first quarterly report of 2022. The company achieved a revenue of 3.027 billion yuan in Q1 in 2022, with a year-on-year / month on month increase of 12.77% / 25.92%; The net profit attributable to the parent company was 108 million yuan, with a year-on-year increase of 37.82% and a month on month decrease of 17.12%; Net profit deducted from non parent company was 104 million yuan, with a year-on-year increase of 32.59% and a month on month decrease of 11.35%.
Comments: the volume and price of products will rise in 2021, driving the growth of performance
1) output: the company achieved 13000 tons of cemented carbide output in 2021, with a year-on-year increase of 24.60%. The output of CNC blades was 103 million, a year-on-year increase of 37.40%. Price: the market price of relevant products increased in 2021, of which the price of tungsten concentrate reached 101612 yuan / ton, a year-on-year increase of 22.96%; Apt price reached 153944 yuan / ton, with a year-on-year increase of 21.25%; The price of tungsten powder reached 237.92 yuan / kg, a year-on-year increase of 18.18%; The price of tungsten carbide powder was 235.85 yuan / kg, with a year-on-year increase of 19.01%.
2) competitive advantage: the company’s cemented carbide products have complete specifications, and the scale of cutting tools, it tools, cemented carbide rolls, precision parts, hard surface materials, ball teeth, molybdenum wires and other varieties ranks first in China. In 2021, the company’s Cemented Carbide output accounted for 27.00% of the country’s total output, ranking first in the world. The output of CNC blades accounts for 25% of the national output, ranking first in China; PCB micro drill has a global market share of 21%, ranking first in the world.
Future core focus: the company will continue to carry out product research and development, improve its core competitiveness, and continuously expand its production capacity: from 2022 to 2023, the company will increase the production capacity of CNC blades by 20 million pieces / year, 2 million pieces / year of overall cutting tools, and 10 billion meters / year of photovoltaic tungsten wires. 1) In 2021, there are five major R & D projects, among which the research projects on the key technologies of micro bit fine grinding and slotting grinding have been completed, which will enhance the company’s technological leading edge in micro drilling processing. In the future, with the completion of the other three R & D projects, the company will make major breakthroughs in PCB automation level, shallow hole drill, modular tool shank, injection molding process, aircraft landing gear coating research and other aspects, so as to provide power for the innovative development of the company. 2) In terms of production capacity, the new 20 million NC blades are expected to be put into operation in the fourth quarter of 2022. At that time, the company’s NC blade production capacity will be increased to 120 million. The overall tool project is expected to reach production capacity from 2022 to 2023, with an additional capacity of 2 million pieces / year. The self hardening company’s new project with an annual output of 10 billion meters of fine tungsten wire for photovoltaic cutting has been opened and is expected to be put into operation by the end of 2022.
Investment suggestion: the company continues to improve the production capacity of cemented carbide products, cutting tools and blades, increase product innovation, optimize product structure, and favor products with high added value and obvious competitive advantage. With the recovery of downstream manufacturing industry and the growth of demand, the company’s performance will be thickened. We expect to realize the net profit attributable to the parent company of RMB 661 / 822 / 945 million in 2022, 2023 and 2024, with a year-on-year increase of 25.4% / 24.3% / 15.0% and EPS of RMB 0.62/0.77/0.88/share respectively. Based on the closing price on April 29, 2022, the PE of the company in 2022 / 2023 / 2024 is 16 / 13 / 11 times, which is covered for the first time and given a “recommended” rating.
Risk warning: the project is not as expected; Technology R & D risk; Downstream demand is lower than expected.
