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江南化工(002226):民爆并购争龙头 “风光”发展拓空间

Jiangnan Chemical (002226): People's Bomb Mergers and Acquisitions Compete for “Scenery” Development to Expand Space

東亞前海證券 ·  Sep 2, 2022 00:00  · Researches

Core viewpoints

The company integrates civil explosion and new energy business, dual-core drive, diversified development. The company's main business is blasting engineering, civil explosives and wind and photovoltaic power generation. The company relies on the China Arms Industry Group, Minbao asset injection to help the company to the leader; Zijin Mining Group shares, later or there will be more business coordination. The company's permitted production capacity of industrial explosives and electronic detonators is 375500 tons and 3670 million respectively, ranking in the forefront of the industry. After the early integration of mergers and acquisitions, the company's performance ushered in the outbreak. In 2021, the revenue was 6.481 billion yuan, and the net profit was 1.053 billion yuan, an increase of 135.58% over the same period last year. During the five-year period, the cost fell by more than 12%, and the reform of state-owned enterprises achieved remarkable results.

Civil explosion, extension and extension strive to be the leader, and the new business shapes the flexibility of growth. Domestic energy supply and overseas "Belt and Road Initiative" construction will expand the long-term growth space for the civilian explosion industry. At the company level, in China, the company's civil explosion business radiates to the whole country with Anhui as the center, and acquires Jin Jianhua to open up the Guangxi market in 2021. Overseas, the company acquired shares in emerging markets such as Mongolia, the Democratic Republic of the Congo and Namibia, and opened up the Balkan market again in 2022. In the follow-up, the weapons Group's Northern Civil explosive and other civil explosive assets will be merged into the company, when the company's production capacity will reach 630000 tons. In terms of new business, the company acquires Qinghua Automobile, cuts into the new civil explosion market for automobiles, and Qinghua Automobile is deeply bound to high-quality customers such as ARC Group, which will help the industry to extend and cooperate and open up growth space.

70 million kilowatts of high-quality "scenery" reserves, high gross margin, high prosperity business is expected to continue to expand.

At the industry level, China's wind power photovoltaic industry is developing rapidly. From 2016 to 2021, the CAGR of China's wind power and photovoltaic power generation capacity was 14.93% and 31.55% respectively, with a high growth rate. In terms of cost mechanism, the cost of wind power and photovoltaic power generation has dropped significantly. According to IRENA data, the leveling power costs of onshore wind power and photovoltaic power generation in 2020 were 0.079 US dollars / kWh and 0.057 US dollars / kWh,10 respectively, which decreased by 56% and 85% respectively. At the company level, the company has a cumulative installed capacity of 1.06 million kilowatts, and in Inner Mongolia and other high-quality resource areas have 70 million kilowatts of scenic resources reserves, high gross margin, high prosperity business is expected to continue to expand.

Investment suggestion

Under the great changes in the civil explosion industry, the company's mergers and acquisitions at home and abroad have rapidly grown into a leader in the industry. The company has 70 million kilowatts of high-quality wind and light resources reserves, the follow-up will continue to make efforts. It is expected that the net profit of 2022Universe 2023 / 2024 will be 1.465 RMB 1.413 billion RMB, respectively, and the corresponding EPS will be 0.44 pm 0.53 max RMB 0.67 per share. Based on the closing price of 5.24 yuan on September 2, 2022, the corresponding PE is 11.92, 9.82 and 7.87 times, respectively. Combined with the prosperity of the industry, we are optimistic about the development of the company. Cover for the first time and give a "recommended" rating.

Risk hint

Strict safety and environmental protection policies, raw material price fluctuations, international business risks, and so on.

The translation is provided by third-party software.


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