Yunlu Co., Ltd. (688190)
The soft magnetic R & D platform of Hangfa has broad prospects for amorphous, nanocrystalline and alloy magnetic powder cores. The company is a new material R & D platform subordinate to China aviation development, a central military enterprise. It continues to expand around magnetic materials and has formed three sectors: amorphous alloy, nanocrystalline and magnetic powder. Benefiting from factors such as power investment and improvement of energy efficiency standards, the total demand for amorphous strip in transformer field will increase from 74700 tons in 2021 to 172600 tons in 2025, with an average annual compound growth rate of about 18.23%; The development of emerging fields such as photovoltaic, new energy and wireless charging will drive the market demand for nanocrystalline and alloy magnetic particle cores. The demand for nanocrystalline materials is expected to increase from 10700 tons in 2021 to 31100 tons in 2025, with an average annual compound growth rate of 30.67%; In 2025, the demand for magnetic particle core is expected to reach 201000 tons, with an average annual compound growth rate of 16.12%.
The core technology creates process barriers and cost advantages, and the market share of amorphous alloy ranks first in the world. The company independently develops a number of core technologies, improves product performance in multiple directions, maintains the stability of mass production process and realizes cost optimization through component ratio adjustment, production process control and key equipment research and development. At present, the performance of amorphous strip of the company is in the forefront of the industry, and the performance of amorphous iron core and nanocrystalline ultra-thin strip is better than that of peer enterprises. With the advantages of performance and cost, the global market share of amorphous alloy of the company in 2019 was 41.15%, ranking first in the world, and the market share of China was 53.17%. In 2020, the global market share of nanocrystals of the company will increase to 7.97% and that of China will increase to 18.36%, gradually narrowing the gap with Hitachi Metals, Advanced Technology & Materials Co.Ltd(000969) etc.
The performance has increased steadily, and the profitability of nanocrystals has been continuously enhanced. In 2021, the company achieved a revenue of 936 million yuan, a year-on-year increase of 30.82%. From 2018 to 2021, the net profit attributable to the parent company increased from 65 million yuan to 120 million yuan, with an average annual compound growth rate of 22.67% and a year-on-year increase of 24.94% in 2021. In 2022q1, the company realized a net profit attributable to the parent company of 38 million yuan, an increase of 25.57% month on month. The gross profit margin of ultra-thin PCT belt was 32.5% year-on-year (the gross profit margin of ultra-thin PCT belt was 471.5% year-on-year), with a prominent year-on-year increase of 32.5%.
Amorphous alloys contributed mainly, while nanocrystals and powders accelerated to catch up. At present, the annual production capacity of amorphous alloy thin strip, amorphous iron core, nanocrystalline ultra-thin strip, atomized powder and broken powder is 60000 tons, 18500 tons, 3600 tons, 3900 tons and 700 tons respectively. Due to the strong downstream demand and the gradual release of production capacity, the output of amorphous alloy, nanocrystalline and magnetic powder in 2021 was 5.13/0.50/0.46 million tons respectively, with a year-on-year increase of 8.36% / 127.24% / 183.58%. The company’s revenue is still mainly amorphous, but the volume of nanocrystalline and magnetic powder is accelerated, and the proportion of revenue increases to 22.61% / 8.96% respectively, which is expected to become a new growth pole.
Profit forecast and investment suggestion: the company is a global leader in amorphous alloy, with excellent R & D technology and large-scale production capacity. The three major projects of amorphous alloy closed three-dimensional roll, high-performance ultra-thin nanocrystalline strip and high-quality alloy powder products will be constructed and put into operation successively. The company is expected to enter the fast lane of production expansion and mass production. We expect the company to realize the net profit attributable to the parent company of RMB 214 / 329 / 508 million and EPS of RMB 178 / 2.74/4.23 in 22-24 years. The PE corresponding to the closing price on May 18, 2022 is 40 / 26 / 17x respectively, maintaining the “recommended” rating.
Risk warning: downstream demand is less than expected; Deterioration of industry competition pattern; The project progress is less than expected; The cost of amorphous materials fell less than expected.
