\u3000\u3000 Zhuzhou Huarui Precision Cutting Tools.Co.Ltd(688059) (688059)
Event:
The company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company will reach 157-167 million yuan in 2021, with a year-on-year increase of 76.39% to 87.63%. It is estimated that the impact of non recurring profits and losses on the net profit will be 9-11 million yuan, mainly due to the government subsidies received by the company.
Key points of the report:
The company’s performance met expectations and maintained growth in the fourth quarter
In the single quarter of 2021q4, the company expects to realize a net profit attributable to the parent company of 35-45 million yuan, with a year-on-year increase of 25% to 60.71%. From the perspective of industry, the driving force of performance growth is mainly that some high-end CNC blade import businesses in Europe, America, Japan and South Korea are hindered by covid-19 epidemic, superimposed with supply chain security concerns brought by the retrograde trend of globalization, and the willingness of end customers to choose domestic blades is increasing, Promote the growth of the company’s revenue; From the perspective of the company, it is mainly due to the continuous improvement of the company’s product performance, the gradual release of production capacity, the continuous improvement of channels and the increase of product sales, which effectively promote the growth of revenue.
The industry breeds growth opportunities, and the company expands its production to meet the golden period of development
In 2020, the domestic substitution space in China’s tool market will be about 13 billion yuan, and Chinese tool enterprises still have large domestic substitution space. The company pays close attention to the industry opportunities and plans to expand production. After the completion of the IPO raised investment project, the annual production capacity will be increased by 30 million cemented carbide NC blades, 5 million cermet blades and 2 million overall cemented carbide tools. After the completion of the convertible bond project, the annual production capacity will be increased by 500000 CNC tool bodies and 1.4 million efficient drilling tools. In recent years, the company has strong product demand and basically maintained overload production. Capacity expansion will break the capacity bottleneck and bring continuous growth of the company’s revenue.
The new capacity is oriented to high-end areas, the supporting capacity of complete solutions is enhanced, and the overall added value is improved
The company’s new NC blade production capacity will extend to non-standard, special-shaped finishing and other fields, which is expected to increase the proportion of high-end downstream application fields such as aerospace and rail transit. The company expects that the average price of cemented carbide and cermet NC blades will be 9.86 yuan / piece and 9.2 yuan / piece respectively in the first year after production, which is significantly higher than the average price of about 6 yuan / piece in 2020, It is expected to create a “simultaneous increase in volume and price” of CNC blades. At the same time, the company’s new production capacity includes cutter head, cutter rod and other supporting products. Matching with NC blade will improve the service life, stability and other performance of NC blade. Superimposing the company’s gradually expanded product categories (New cermet blades, efficient drilling tools, etc.), it is expected to improve the company’s ability to provide complete solutions and enhance the added value of the overall product.
Investment advice and profit forecast
It is estimated that the net profit attributable to the parent company from 2021 to 2023 is expected to be 160 million yuan, 226 million yuan and 317 million yuan respectively, corresponding to the current pe41x, 29x and 21x. Considering the growth space of the cutting tool industry, the continuous expansion of the company’s production capacity and the continuous enrichment of product lines, it is expected to provide solutions for high-end market customers in the future, maintain high profitability and maintain the “buy” rating.
Risk tips
The progress of domestic substitution is less than expected, the scale expansion of tool market is less than expected, and the capacity expansion is less than expected.
