\u3000\u3000 Shandong Donghong Pipe Industry Co.Ltd(603856) (603856)
The "14th five year plan" promotes the demand for engineering pipelines, and the market share of the company is expected to increase
We estimate that in 2020, China's municipal pipeline market will reach 55 billion yuan, building water supply and drainage 25.7 billion yuan, and the company's main market segments will total 80.7 billion yuan. Looking to the future, the "14th five year plan" is expected to drive the demand for pipelines, such as gas, new and reconstructed sewage pipe network, urban-rural water supply integration (the penetration rate of rural tap water will reach 88% in 2025). At the same time, national key projects such as the central and western line of South-to-North Water Transfer Project will further stimulate the demand for pipelines, especially large-diameter composite pipelines, anti-corrosion pipelines and energy-saving thermal pipelines. According to the calculation of sales volume, the company has accounted for 1% of the national plastic pipeline Market in the past 20 years, including 1.3% in North China and 0.9% in East China. The company has expanded the market with "one main body and two wings", and the engineering pipeline has developed to "Trinity", and the market share is expected to be further improved.
Hold the large order of the second phase of the South-to-North Water Transfer Project to highlight the pipeline strength of the project
In 2021, the company won the bid for the procurement project of PCCP pipe, ductile iron pipe, penstock pipe and pipe fittings of Hanji Weihe phase II project, with a total amount of 820 million yuan. We expect to release our performance in 22-23 years. The pipeline demand is all plastic coated steel pipes, with a maximum diameter of 3.4m, which can partially digest the new production capacity of plastic coated steel pipes. The second phase of the project from Han River to Wei River belongs to Shaanxi South-to-North Water Transfer Project. The bid winning amount is large, which shows the strength of the company's products and products, and is expected to help obtain more follow-up orders.
Industrial and mineral products have high barriers to entry, and the advantages of the whole series of products are prominent
The market access threshold of mining pipeline is high. The company has 113 safety mark certificates of mining products and rich project experience. It has supplied 183700 km of pipeline products for Shenhua Shendong and other industrial and mining enterprises. The company has joint production of pipes and fittings, and has mastered a number of key pipe connection technologies such as socket and socket anti-corrosion steel pipe flexible connection and steel pipe double sealing connection for medium and low pressure, which has the advantages of the whole industrial chain.
Investment suggestions: 1) stable growth and cost pressure relief in the short term or benefit: in 21 years, the average price of polyethylene / steel wire / steel of q1-3 company was 7579 / 7073 / 5167 yuan / ton respectively, with a year-on-year increase of + 7.5% / + 25.9% / + 43.7%. The gross profit margin decreased significantly due to the obvious increase of raw materials and the price reduction of some products. We expect that the cost pressure caused by raw materials may be relieved in 2022. The company's business is mainly related to infrastructure, industry and mining, and is basically not affected by real estate policies. We believe that the steady growth of infrastructure is strongly related to the company's business.
2) release of new capacity scale: in 21 years, the company increased the annual production capacity of 128000 tons of new anti-corrosion steel pipes and 64000 tons of high-performance and new composite plastic pipes, with the overall production capacity increasing by more than 80% compared with the end of 20fy. With the market expansion of the company's "region + field", the improvement of capacity utilization is expected to accelerate the release of profits.
3) looking at the pipeline demand of the "14th five year plan" project and the company's differentiated competitiveness in the long run: in 2021, 757.6 billion yuan of water conservancy investment was completed, and the construction of national large-scale strategic projects was orderly promoted. It is expected that the market demand of the engineering pipeline industry will continue to grow steadily in a long period of time in the future, and the company's product differentiation is expected to continue to benefit.
On the whole, we estimate that the net profit attributable to the parent company from 21 to 23 years is RMB 198 / 401 / 507 million. Comparable listed companies correspond to the 22-year wind consensus expectation, with an average of 15.8xpe. We recognize that the company will be given a 22-year 15xpe, with a target price of 23.25 yuan / share. It will be covered for the first time and given a "buy" rating.
Risk tips: the price of raw materials has risen sharply, the new capacity cannot be digested in time, and macro policy risks
