\u3000\u3000 Jiangsu Toland Alloy Co.Ltd(300855) (300855)
Event: the company released the performance forecast for 2021. It is estimated that the company will realize the net profit attributable to the parent company in 2021 (RMB 169 ~ 185 million, year-on-year + 54.93% ~ 69.60%), deducting the net profit not attributable to the parent company (RMB 149 ~ 170 million, year-on-year + 57.86% ~ 80.11%). In a single quarter, 2021q4 company realized net profit attributable to parent company (38 ~ 54 million yuan, year-on-year + 19.38% ~ 70.28%, month on month – 11.05% ~ + 26.88%), deducting net profit not attributable to parent company (34 ~ 55 million yuan, year-on-year + 57.47% ~ 153.71%, month on month – 7.44% ~ + 49.14%).
Jiangsu Toland Alloy Co.Ltd(300855) as the core supplier of high-temperature master alloy and precision casting gearbox for China’s military aviation development, its 2021q4 performance has increased significantly year-on-year and maintained an increase in the median month on month, or shows the high-profile atmosphere of China’s military aviation development track. We believe that Jiangsu Toland Alloy Co.Ltd(300855) as a civil military enterprise with explosive products in China’s aviation development industry chain, It will significantly benefit from the high scenery of the aeroengine track.
1. At the industry level: the aeroengine track has four growth logics, giving birth to a trillion market. 1) Batch production and speed-up of the main models of the third generation aircraft; 2) Many new types of Hangfa have intensively entered the stage of finalization and batch production; 3) With the increasing intensity of practical training, the market after aircraft maintenance is opening up rapidly; 4) Domestic commercial aviation launch batch production will bring greater growth space.
2. At the company level: Jiangsu Toland Alloy Co.Ltd(300855) has extremely high barriers in the “superalloy materials, precision casting” and other links. With precision casting GearBox products, the company has become a rare civilian military enterprise with explosive products in China’s aviation development industry chain, which will significantly benefit from the high scenery of the aviation development track. Superalloy materials + products need to face extremely harsh working environments such as high temperature, high pressure and high speed of aeroengine, and superimpose harsh requirements such as quality reliability and performance stability, which creates a very high barrier in this link. Jiangsu Toland Alloy Co.Ltd(300855) is one of the rare casting master alloy enterprises in China (others, such as Gaona Aero Material Co.Ltd(300034) , 621, Shenyang Metal Institute, etc.), and it has the technology of “casting master alloy smelting + precision casting process”, which makes it obtain a popular single precision casting gearbox. As the main bearing component of aeroengine, precision casting gearbox needs to meet the requirements of high strength and thin wall, and has very high requirements for materials and processing technology. Jiangsu Toland Alloy Co.Ltd(300855) took the lead in realizing the mass production of large-scale superalloy precision castings with diameter greater than 1000mm and wall thickness less than 2mm in China. The leading technology enables it to supply in batches on multiple aircraft launch models, and the value of single machine will increase when the third generation machine is upgraded to the fourth generation machine. It will grow rapidly in the future with high certainty.
Growth path of the company in the future: military products continue to cultivate the two machine industry chain; Set up Shenyang Tunan to expand its product line; Continue to expand in gas turbines, nuclear power and other civil products.
1. New model penetration + capacity expansion, “casting master alloy + precision casting” has developed rapidly in the field of two machines. The casting master alloy brand is continuously developed and applied to various models, and the excellent single product of precision casting gearbox will improve the permeability on the new brand. In addition, the company actively expanded its production to cope with the rapid growth of the aviation industry. For example, in 2020, the company will add 2.5 tons of vacuum induction furnace into operation and increase the smelting capacity of 800-1000 tons / year; The IPO raised investment projects “construction project of ultra pure high-performance superalloy materials with an annual output of 1000 tons” and “construction project of complex thin-walled superalloy structural parts with an annual output of 3300 pieces” were put into operation in July 2022 and the end of 2022 respectively. The production capacity of casting master alloy, deformed Superalloy and precision casting gearbox will be added. The production capacity is not the core contradiction of the company in the short term.
2. Set up Shenyang Tunan to expand the product line in the field of aviation development. In July 2021, the company established a subsidiary, Shenyang Tunan, which will form a complete aviation parts development capability in the future, which is in line with the industrial development idea of “small core and large cooperation” of Hangfa group. At the same time, it will help the company further cultivate the Hangfa track and expand the product line.
3. Civil fields such as gas turbine and nuclear power continue to expand. The company’s deformed superalloys are mainly in civil fields such as nuclear power, gas turbine and petrochemical industry. The compound growth rate of revenue from 2016 to 2020 was 10.01%, and the revenue in 2021h1 increased by 4.03% year-on-year, mainly because the smelting capacity was squeezed by military products. With the release of capacity and the strong demand for gas turbine and nuclear power, we believe that the deformed superalloy products will develop rapidly; Special stainless steel is mainly seamless pipes, which are used for various types of ducts, oil pipelines, hydraulic pipelines and other components of aircraft fuselage. The company’s special stainless steel seamless pipes occupy a prominent market position in China’s aviation field, with revenue growth of 23.19% and 76.68% in 2020 and 2021h1. In the future, the company will continue to cultivate in the field of civil products and open up growth space for the military civilian integration development strategy.
Investment suggestion: Jiangsu Toland Alloy Co.Ltd(300855) is an excellent supporting supplier of superalloys in the aviation development industry chain, which will significantly benefit from the large-scale growth of aeroengines. We estimate that the net profit attributable to the parent company from 2021 to 2023 will be 181 million yuan, 255 million yuan and 346 million yuan respectively, and the corresponding PE will be 70X, 50x and 37x respectively, maintaining the “buy” rating.
Risk warning: downstream demand is less than expected; Capacity release was less than expected.
