\u3000\u3000 Liaoning Fu-An Heavy Industry Co.Ltd(603315) (603315)
Consolidate the foundation and expand the source, extend the industrial chain and stimulate growth vitality. Liaoning Fu-An Heavy Industry Co.Ltd(603315) was established in 2004. Its traditional main business is large steel castings. In 2019, it acquired Liaoning Metallurgical Design and Research Institute to cut into the field of environmental protection engineering. At this stage, the company has a dual main business model of casting business and environmental protection engineering. After the company entered the field of environmental protection engineering, its performance was significantly thickened. In 2020, the company’s total revenue was 882 million yuan, an increase of 7.23%, including 324 million yuan in foundry business and 528 million yuan in environmental protection business. The company will continue to expand and extend new fields. In 2017, Liaoning Fuan gas turbine Co., Ltd. was established, mainly engaged in gas turbine sales. In December 2021, the company announced that it plans to participate in the investment and establishment of Sichuan Ruian New Material Technology Co., Ltd., and plans to participate in 49% shares, cutting into the field of lithium battery cathode materials. The company gives full play to the collaborative advantages of the industrial chain, extensive expansion and stimulate growth vitality.
Cut into the field of lithium cathode materials and open up growth space. The company plans to cooperate with beiteri to establish a subsidiary of lithium battery cathode materials, and plans to invest in the production line of 100000 tons of lithium battery cathode material precursors and finished products. With the general trend of global vehicle electrification, the penetration rate of new energy vehicles has continued to increase, and the demand for driving power batteries and negative electrode materials has maintained rapid growth. The graphitization capacity of the negative electrode material project jointly invested by the company and beiteri is provided by Tianquan Fuan, a subsidiary of the group. The core advantages of the negative electrode material business are reflected in two aspects: one is the strong technical strength of graphitization and rich industrial experience of the management; the other is the obvious cost advantage. Synergetic Tianquan Fuan has the advantage of graphite integrated production. At the same time, the negative electrode material and graphitization capacity are distributed in areas with low energy cost, leading equipment and technology, production efficiency Further consolidate the cost advantage in terms of equipment investment and energy consumption.
The gas turbine business has been actively expanded and has a broad growth space. In 2017, the company invested and established a gas turbine company to cut into the field of gas turbine. The company introduces the advanced manufacturing technology and expert team of Russian industrial gas turbines, and finds a unique way to independently develop and produce industrial gas turbines applied in the field of distributed energy in China, which can provide low-cost and high-yield core power equipment and energy station solutions for the distributed energy market. It has the advantages of high efficiency, low cost and adapting to the change of heat load, and has strong international competitiveness. Shareholders of gas turbine subsidiaries have deep technical background. We believe that distributed energy is an important application direction of light gas turbine in the context of double carbon, and will be the core driving force for the rapid growth of light gas turbine demand. The company continuously strengthens product competitiveness by introducing overseas R & D teams and implementing equity binding. At the same time, it benefits from the coordination of casting business and further enhances its cost advantage, We expect that the company’s gas turbine business is expected to achieve rapid growth during the 14th Five Year Plan period.
The environmental protection engineering business consolidated its advantages and benefited from the continuous promotion of industrial emission reduction. In 2019, it acquired the design institute and cut into the field of environmental protection engineering. The company’s environmental protection engineering business is to provide energy-saving and emission reduction solutions for the industrial field. Looking forward to the “14th five year plan”, industrial energy-saving and emission reduction will still be promoted in an orderly manner, and the ultra-low emission requirements will drive the replacement investment. In addition, the improvement of the demand for flexible transformation of thermal power is also expected to create a new growth point. Under the background of promoting the adjustment of energy structure, accelerating the adjustment of industrial structure and promoting the construction of resource-saving and environment-friendly society, emission reduction and energy saving industries play an important role in realizing cleaner production and developing circular economy in basic industries such as electric power, metallurgy and petrochemical. The industry is supported and encouraged by national environmental protection policies and industrial policies. Since 2015, China has implemented the supply side reform of the iron and steel industry, and the profitability of the industry has continued to improve. In 2019, the Ministry of ecological environment and other departments jointly issued the opinions on promoting the implementation of ultra-low emission in the iron and steel industry to boost the demand for iron and steel capacity transformation in the next five years. At the same time, the improvement of enterprise profits is conducive to the implementation of capacity transformation investment. The company’s environmental protection engineering business has great advantages in technology, project experience, management experience, cost and business qualification, and is expected to fully benefit from the dual carbon trend.
Profit forecast and investment rating: we expect the net profit of the company from 2021 to 2023 to be 71 million yuan, 169 million yuan and 300 million yuan respectively, and the corresponding EPS are 0.23 yuan / share, 0.55 yuan / share and 0.98 yuan / share respectively, corresponding to 104 times, 43 times and 24 times of the current share price PE respectively. For the first time, give the company a “buy” rating.
Stock price catalyst: the installed capacity of power batteries increased more than expected, and progress was made in the expansion of new business areas.
Risk factors: the risk of new business expansion falling short of expectations, the risk of intensified market competition, the risk of repeated epidemic, the risk of rising prices of raw materials, etc
