This report is read as follows:
The company's performance in 2021 is in line with expectations. The company's new projects will be concentrated in 22-23 to increase production and optimize product structure at the same time, we expect the company will enter a stage of rapid development.
Summary:
Maintain the "overweight" rating. In 2021, the company achieved an operating income of 5.745 billion yuan, an increase of 10% over the same period last year, and a net profit of 664 million yuan, an increase of 23.7% over the same period last year. Taking into account the rise in raw material prices, the company's net profit in 2022-2023 is forecast to be 8.23 yuan and 947 million yuan (formerly 9.27 yuan and 1.094 billion yuan), and the net profit in 2024 is forecast to be 1.08 billion yuan. Maintain the company's target price of HK $7.58 and maintain its "overweight" rating.
Production capacity continues to expand and profitability continues to improve. In 2021, the company's sales of die steel and high-speed steel products were 16.49 and 24100 tons respectively, down 9.3% and up 6% respectively compared with the same period last year. In 21 years, the gross profit of die steel and high-speed steel products was 3859 yuan / ton and 13553 yuan / ton respectively, up 224 yuan / ton and 3954 yuan / ton respectively compared with 2020, and the profitability of the company continued to rise. According to the company announcement, the company's 50,000-ton die steel expansion project, 7000-ton fast forging machine project and cemented carbide project are being carried out in an orderly manner. We expect that after the project is put into production, the company's product structure will be further optimized and its performance will continue to be released.
Powder metallurgy continues to make breakthroughs. Since the first 2000-ton powder metallurgy project was completed and put into production in 2019, after early technical exploration and production capacity climbing, the company's powder metallurgy project has gradually reached production at the end of 21 years. The company's second phase of powder metallurgy of 3000 tons is being carried out in an orderly manner and is expected to reach production in the fourth quarter of 22. We believe that the company has advanced powder metallurgy technology and deep barriers. In addition to powder metallurgy tool steel, the company's powder metallurgy market will continue to be developed in the future, leading to the upgrading of the company's product structure.
The production capacity of the Thai tool factory has been released and the titanium alloy products have expanded smoothly downstream. The second phase of the company's Thai plant project was certified by customers in May 21, and the monthly output exceeded 4 million pieces at the end of 21. We expect the Thai tool factory's cutting tool production capacity to rise to 100 million units. At the same time, the company's titanium alloy products extend downstream and make a breakthrough in the field of glasses and 3D printing. In 21 years, the sales volume and revenue of titanium alloy products increased by 50.5% and 54.4% respectively. We expect the profitability of the titanium alloy sector to continue to rise in the future.
Risk hint: the production progress of new production capacity is not as expected.
