Tiangong International disclosed its 2021 results: revenue rose 10.0% year-on-year to 5.74 billion yuan, and net profit increased 23.7% to 660 million yuan. The dividend payout ratio is 25.0%.
Our comments are as follows: excluding trade, the core main business income is 4.72 billion yuan, an increase of 13.1% over the same period last year. By country, the overseas economy recovered, the export business increased by 47.1% to 2.39 billion yuan, and the export business of all sectors increased significantly. The company strategically concentrated more production capacity on the delivery of overseas orders, and domestic sales fell 8.5% to 2.33 billion yuan.
The sales of die steel were stable, and the gross profit margin decreased after the cancellation of export tax rebate. In 2021, die steel revenue increased 1.7% to 2.39 billion yuan compared with the same period last year. After the cancellation of the export tax rebate, the cost of some outstanding orders increased, and the gross profit margin fell 1.5 percentage points to 26.6% compared with the same period last year.
The revenue of high-speed steel increased by 29.6%, the pressure of rising prices of raw materials was completely transferred, the superimposed product structure was pushed to the high end, and the gross profit margin increased by 4.4 percentage points. In 2021, revenue increased by 29.6% year-on-year to 1.01 billion yuan, and the rise in selling prices was the main driving force. 1) the pressure of rising prices of raw materials was completely transferred. 2) the sales of high-alloy high-speed steel and powder metallurgy products increased, and the gross profit margin improved by 4.4% to 32.5% compared with the same period last year.
With strong demand at home and abroad, Thailand cutting tool Factory Phase 1 has entered the stage of mass production, with increased output and efficiency, and the gross profit margin of cutting tools has been greatly improved by 9.5 percentage points. Revenue in 2021 increased 20.9% year-on-year to 1.06 billion yuan. The increase in production diluted the unit cost, and the company is the whole industry chain model, self-produced materials to resist the risk of fluctuation of raw materials, gross profit margin increased 9.5 percentage points to 28.4% compared with the same period last year.
The structural transformation of the titanium alloy business has achieved results, with sales volume. Titanium alloy successfully opened up domestic and foreign civil markets. In 2021, revenue increased by 54.4% to 260 million yuan compared with the same period last year, and 21H2 revenue increased by 98.5%. But the higher cost of sponge titanium affected earnings, with gross profit margin down 2.2 percentage points from a year earlier to 16.0%.
Our point of view: looking forward to 2022, the company has continued to promote the transformation of product structure to high-end alloy for many years. High-end die steel production expansion, powder metallurgy, cutting tools Phase 2, precision tools, heavy-duty rapid forging machines and other projects are in the output release period or are just around the corner. This will significantly promote the improvement of the added value of the company's finished products. We estimate that the company's income from 2022 to 2024 will be 59.6,64.5 and 6.99 billion yuan respectively, and the net profit will be 8.0,9.1 and 1.05 billion yuan respectively, an increase of 20.2%, 14.3% and 14.7% over the same period last year. For the first time, the company will be given a "prudent overweight" rating, with a target price of HK $3.90, which corresponds to 11 times the forecast PE for 2022.
Risk tips: repeated epidemic situations, economic decline at home and abroad, and a trade environment that is not conducive to exports.
