\u3000\u3 Shengda Resources Co.Ltd(000603) 985 Jiangyin Hengrun Heavy Industries Co.Ltd(603985) )
Recently, the company issued the announcement on the share increase plan of the controlling shareholder. Jining urban investment, the controlling shareholder of the company, plans to increase the shares of the company with its own funds in the next five months, with a number of no less than 3.39 million shares and no more than 6.78 million shares (accounting for 1.00% to 2.00% of the total share capital of the company).
Key points supporting rating
Affected by multiple factors, the company’s recent performance is under pressure, and the increase of controlling shareholders’ holdings shows their confidence in future development. In the first quarter of 2022, the operating revenue was 372 million yuan, a year-on-year decrease of 40.37%, and the net profit attributable to the parent company was 13 million yuan, a year-on-year decrease of 90.91%. The recent performance continued to be under pressure, mainly due to 1) after 20 years of land wind rush, the demand for land wind installation fell in 21 years; 2) The price competition of Landwind flange intensifies; 3) In the past 21 years, the amount of sea breeze bidding fell sharply, and the order volume of the company’s sea breeze flange fell; 4) The cost of raw materials remains high; 5) Affected by the epidemic at the beginning of the year, production and logistics in the Yangtze River Delta were limited. On May 13, the company announced that Jining Chengtou, the controlling shareholder, plans to increase its holdings of the company’s shares with its own funds within five months from that date, and plans to increase its holdings of no less than 3.39 million shares and no more than 6.78 million shares. Before the planned increase, Jining Chengtou held 92.679 million shares, accounting for 27.33% of the total shares of the company, which will reach 28.33% to 29.33% after the increase, Fully demonstrate the confidence of the company’s shareholders in the future development of the company.
The second half of Haifeng bidding is worth looking forward to, and the company’s flange business is expected to pick up. In 2021, China’s sea wind bidding volume was less and the price competition of land wind intensified, which had a great impact on the recent shipment and profitability of the company’s flange business. After entering 22 years, the wind power bidding volume ushered in a recovery. According to our incomplete statistics, the wind power bidding volume reached 30.53gw from January to April 2022, including 28.29gw of land wind and 2.24gw of sea wind, a significant increase over the same period of previous years. In addition, as the market pattern of sea breeze flange is better than that of land breeze flange, its price and profit level are better, and the annual bidding volume is expected to be about 15gw. Therefore, in the second half of the year, with the recovery of China’s sea breeze market and the mitigation of the epidemic situation in the Yangtze River Delta, as one of the few enterprises in the world that can manufacture 7.0mw and above Shanghai wind power tower flange, the company is expected to have a revenue end and
The profit side will improve.
The company’s wind power bearing products are about to be mass produced, and its comprehensive competitiveness has been steadily improved, creating the second growth curve. Relying on its rich experience in the production of large ring forgings, the company extends to the downstream products of ring forgings and develops the business of large wind power bearings. At present, the company’s “production line project with an annual output of 4000 sets of large wind power bearings” has entered the construction stage and is expected to be put into operation in June 2022. Due to the high technical threshold of wind power bearing, the current localization rate is low and the market space is large. After the project is put into operation, it will provide new growth power for the company. In addition, another fund-raising project of the company, “deep processing project of gears with an annual output of 100000 tons”, is steadily advancing. After completion, it will effectively enrich the company’s product varieties, form the company’s overall product scale and supporting advantages, and effectively enhance the company’s comprehensive competitiveness.
Valuation
According to the operating conditions of the company, the profit forecast of the company is adjusted. It is estimated that the company will achieve an operating revenue of RMB 3.10/4.24/4.78 billion and a net profit of RMB 4.3/6.6/790 billion from 2022 to 2024, maintaining the buy rating.
Main risks of rating
Offshore wind power bidding is less than expected; The verification progress of bearing products is less than expected; Risk of rising raw material prices; Industry competition intensifies; The impact of the epidemic.
